Use multiple timeframes to get the bigger picture and zoom in a bit. Period. You should be mashing up the various timeframes that you use to make your best trades.
You need to take a look not only at your preferred trading timeframe but also at the best way to move in and out of different charts in order to find the best winning trades for yourself. The more that you practice at this, the easier it will become and the better you will get at it. If you are ready to begin, we can start to teach you a few of the basics about how to best use the different charts that you are dealing with.
The first thing you will want to do is take as broad of a look at the market as you possibly can. Why? Because you need to be sure that you are seeing the entire picture for what it is worth. This is to say that you cannot assume that whatever slice of the market you happen to be viewing on a smaller timeframe is giving you the full picture that you need to understand what is really going on in the market.
A big part of the reason why longer timeframes are so important is that the longer the time frame, the more effort it takes to move the market. This means that the moves are more genuine and stronger as a whole. In addition to this, support and resistance levels are sturdy on longer timeframes. As such, you can better trust the results that you get by looking at a longer timeframe than you might from a shorter one.
It may be necessary for you to make some strategic decisions about entries and exits based on which charts you are looking at and how they correspond with the market movements that you witness at any given time. Don’t allow yourself to get duped into thinking that a market movement on a short timeframe is truly the overall course of the market as a whole. That may not be the case at all, and you might miss out on some significant moves if you stick by this belief.
Multiple Timeframe Analysis
It will be necessary for you to perform multiple timeframe analysis in order to find the best spots to place your trades. This is to say that you will want to be sure that you are examining how the market is reacting to various indicators and news as it comes out. When you look at all of that information carefully, you can better figure out where you want to place your trades and how you can execute those trades to your best ability.
You may want to first start by examining the 4-hour chart of any given currency pair that you are looking at. Here’s why.
In the below 15-minute chart, price seems to be holding nicely at the 200 SMA level. You may think this entry is a great spot to go long.
But wait… What happened? Price blew through the well-established 200 SMA support zone.
If you’d looked at the 4-hour chart, you’d have seen that price was simply bouncing off of the newly-created trend channel.
By combining your review of both of these charts in your analysis, you can more easily see how they play off of each other and how it is possible for you to profit from the use of both types of charts no matter what. Look for trends in the longer timeframe charts to figure out which way you believe the market is moving. Then, make sure you look for the best entry and exit points on a shorter timeframe chart in order to make the most of your analysis of both sides of the coin. You do NOT want to put yourself in a position where you are trading off faulty information.