Time will be one of the most important variables all traders will need to think about. In fact, your preferred trading time frame will directly affect which trading strategies and indicators will be most effective for you. While some traders want to hold positions for many periods in a row, others (such as day traders) will hold their positions for very short periods of time.
Finding the right time frame for your trading is not an easy task.
A Forex trader faces a wide variety of choices when the trading career is started... and choosing the chart type and time frame configuration is one of them. Also, read the weekly trading strategy that will keep you sane.
How do I determine the time frame and what things should be considered?
First of all, the time frame choice is connected to your trading style. Here is a list to provide an essential idea:
- In case of a position trader - use higher time frames like a weekly chart.
- In case of a swing trader - use intermediate time frames like a 4-hour chart.
- In case of an intra-day trader - use lower time frames like a 15-minute chart.
This is a simplified approach and we advise to tackle the market in a smarter way – more on that down below.
One more important message: there are many other important choices (besides time frame) that need to be made before you start risking your trading capital. Of course, the Double Trend Trap method is always available if you want to make your trading simple. Also, read bankers' way of trading in the forex market.
MULTIPLE TIME FRAME (MTF) ANALYSIS
Trading Strategy Guides advises traders to use multiple time frame analysis techniques. This can result in a most reliable forex strategy.
Why? It offers the opportunity for traders to understand the market structure in a much deeper and profound way than any single time frame analysis can do.
Single time frame:
Multiple time frame:
It offers the chance for traders to read what the big money is doing, instead of trying to follow someone on TV. It offers the possibility for traders to improve and enhance their strategy’s performance via better entries, exits, trade management, money management, etc.
Let’s compare this with a single time frame strategy. A single time frame strategy offers a very limited view of the market and often leaves traders confused as to why their setup is failing.
This is why we recommend multiple time frame (MTF) analysis. Using MTF does have the drawback that it can confuse new traders just starting out. Here you can learn how to find opportunity in Forex.
MTF’S SECRET MIX
That is where our TOFTEM model steps in. If you are left scratching your head, don't worry. Click this link about chart patterns for more information.
- The TOFTEM system allows traders to use multiple time frame analysis in a simple step by step fashion.
- Traders in fact hardly realize they are implementing MTF because it is engrained in the strategy.
- Trading MTF becomes a natural flow with the TOFTEM model.
- This IS your “secret weapon," so use it wisely!
As a result, our analysis and trading process becomes simple. You also get a better snapshot of the market with multiple time frame analysis. Now traders can have the benefits of both worlds:
- The simplicity of a single time frame approach.
- Combined with the in-depth understanding of market structure via multiple time frames.
Wow! You gotta love trading, don’t you? 🙂
The DTT strategy uses the TOFTEM model for its approach as well. Although the DTT is not the only configuration possible, it does make the steps simpler for you as a Forex trader. We also have training on Japanese Candlesticks and How to use them.
MULTIPLE TIME FRAMES AND TOFTEM
Multiple time frame (MTF) analysis offers traders the variety needed to implement the TOFTEM model. Before we embark on this journey, let us explain what degrees of time frames we use and what the TOFTEM stands for.
Trading Strategy Guides uses 5 primary degrees of time frames. Irrespective of the time frame a trader chooses, its best to maximize the number of degrees to 5. The time frames we use for this article are:
- Weekly, daily, 4 hour, 1 hour, 15 min.
- Some traders use the 8 hour and/or 2-hour charts instead of the daily, 4-hour, and/or 1 hour. This is perfectly fine.
TOFTEM stands for:
- Entry Method.
The TOFTEM and MTF are explained step by step below:
STEP 1 TREND:
- The recommended trend time frames are the 4-hour, 8-hour and/or daily chart because they provide sufficient overview of the past price action in the market. Traders can adequately judge whether a market is trending, reversing, or ranging.
- If a trader is trading long-term positions, then the weekly chart is optimal.
- If a trader is trading very short-term positions, then a 1-hour or 2-hour could be better.
The beauty of our DTT trend indicators is that they automatically show what the trend is in the 4 hour and daily charts no matter what timeframe you are actually looking at! This keeps your trading simple and consistent throughout time. Here You can see a funny video about trading levels.
If the market matches what your strategy is looking for, then you can move on to the next step which is an opportunity. If not, then move on to the next currency pair.
STEP 2 OPPORTUNITY:
Trading Strategy Guides recommends checking whether there is an opportunity for 1 and/or 2 time frames lower than the trend chart. This provides the possibility for traders to zoom in and look for trade setups in the direction of their step 1.
STEP 3 FILTERS:
Trading Strategy Guides recommends checking whether there is a filter on 1 (and/or 2 time) frame(s) higher than the trend chart. This allows traders to check whether any major support or resistance levels (and/or other chart elements) could be blocking a potential trade setup from materializing.
The currency pairs that remain interesting after review via these 3 steps, can be placed on a “watch list". These are trade setups which are getting close to execution.
STEP 4 TRIGGER:
Now that the potential trade setup is close, Trading Strategy Guides recommends checking for triggers on the on 2 (and/or 3 times) frame(s) lower than the trend chart. The trigger chart should be closer to price action than the trend in Step 1 (Trend) and Step 2 (Opportunity) as it keeps in sync with the market rhythm.
STEP 5 ENTRY METHOD:
The timeframe for the entry can actually be quite diverse. It can be the same as the trigger chart, or even again 1-time frame lower. It could also be the same time frame as the Step 2 Opportunity chart.
For the DTT traders, all of the above is well-known. For others, this approach is new, or almost new.
How do YOU view multiple frame analysis? Do you trade better with it? What advantages do you get while trading using MTF? What do you think about this simple way of trading forex?
Please tell us how your time frame approach differs from above.
Thanks for taking the time to read this article and hope you will share it with others as well. Leave a comment below if you have any questions about this simple way of trading multiple time frames.
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To learn more about the trend following trading strategy, click here.
Wish you Happy Trading!