Trading across multiple timeframes is something that traders have to do all the time. It is necessary for them to examine what is going on in those different timeframes in order to get an idea of what the market is really trying to indicate at any given time.
Multiple time frame analysis simply means looking at the same currency pair across a variety of timeframes. There is nothing complicated about it. Still, it does get some people concerned when they hear of a term with as much weight and meaning as that one. Alas, there is nothing to be truly scared of.
Keep in mind that pairs exist across multiple timeframes. You can look at them in daily, hourly, 15-minute, or even 1-minute charts if you really wanted to.
You can select the timeframe that you would like to view a particular currency pair’s price action by simply selecting the timeframe that works best for you from a drop-down menu of options on the platform that you use for trading. It is really as simple as that. Just make sure you are consistently looking at the timeframe that you believe you have selected. Making decisions based on viewing materials across the wrong timeframes can be devastating for your trading abilities.
It’s simply a matter of zooming in or zooming out on the bigger picture. Some traders tend to spend an extra dose of time on specific timeframes that they are the most comfortable with. That is perfectly fine as long as they understand that other options do exist out there. It is a good idea to try to find the right balance between time frames so that one can spend only the amount of time that makes sense on a specific timeframe.
When you view multiple timeframes before placing a trade, you gain all of the following benefits:
- You can better see where short-term support and resistance is
- It may help you see what other market participants are doing and thinking
- You might be ahead of the curve when it comes to spotting trends
- You can develop a fully-formed exit and entry strategy
- You can confirm a trend reversal on a higher timeframe
- You get insight into the actions of other market participants
- You see the small picture, medium picture, and the big picture
It is going to be important to think about each of these elements and do your best to use multiple timeframes to develop a comprehensive strategy. You do not want to leave anything to chance when you are ready to place your trade.