Forex Trading Systems | Forex Strategies

Multiple Time Frames Strategy in Forex Trading

Whether you are a beginner at forex trading or not, you will most likely come across the multiple time frame strategy at some point in time especially if you have taken up market education. Nevertheless, there are still some who forget this analysis, which is actually the foundation of getting an edge at reading charts and creating one’s strategy. Multiple time frame technique involves you knowing how to choose your means of analysis for different periods and how you can put all the gathered information together.

Guidelines

Multiple time frames are considered as an analysis in which a trader will have to monitor the currency pair that he focuses on according to the time compressions. This may seem easy but to succeed with this forex strategy, you need to know the general guidelines that you should follow. First, you will need to use three frequencies so that you can get enough information on the market. Any number less than this will result to you losing a considerable amount of data but using more will cause redundancy in analysis.

This is a good strategy wherein you should determine the medium term period that would represent the standard average on how long the trade will hold. Next, you will need to decide on the short term period but it should be one fourth of the first time frame. For instance, if your medium term is 60 minutes, your time frame for the short term period will be 15 minutes. Now, when you are done determining what your first two time frames are, you can proceed with the long term one. Calculate it and it should be four times larger than the first one in the minimum. So, if you have 60 minutes, it should be at least 240 minutes for the long term time frame.

The Time Frames

The first frequency that you have to work on is the long term time frame because this is where you can find the dominant trend at present. Here, you will need to consider the direction of the trend. Although you can consider the other direction of smaller trades, you will only get a small number of profits here. To avoid losses here, one has to concentrate on the major economic releases on the major countries. You have to take into account the main concern in the economy whether it is about the deficits, the interests, the expenses and the investment on businesses.

Now, onto the medium term time frame: this should be the most used level due to the fact that both the short term and the long term periods are derived here. Follow the chart here closely so that you can have a clear idea as to what you should plan for the current market trend.

Finally, the last is the short term time frame wherein the trades should be carried out here. This is a big help for those who are seeking for a direction where they can place their position and perform transactions.

As mentioned, you will need to put the gathered data together so that they can form an attractive entry where you can evaluate the currency you are watching out for. In addition, you can count on the success that you can achieve with these three time frames. This is a great method where you can lower the risks and improve the probability of higher profits because you have actually put up an analysis about the market trend at present.

However, ever since the traders find their own strategy, they forget the importance of time frames. Avoid emulating their mistakes and focus on the basics so that you will eventually find success in your forex trading transactions.