A Recap of Successful Multiple Timeframe Analysis

Let’s recap what it takes to effectively trade multiple timeframes.

• Finding what works – While you are still a long way off from making your first forex trade, you probably have a good idea of what timeframes will work better for you. Patient traders may prefer a long-term chart setup, while more active traders might want a short-term chart set-up. This is a personal preference that has to be decided by you and you only.
• Look up – Once you have found your favorite time frame, look up! If you focus on the 5 minute charts, then look toward the 15 or 1 hour charts for the “big picture.” If you focus on the 1 hour timeframe, then look to the 4 hour or 1 day charts for your “big picture.”
• Tunnel vision is a pathway to failure – The goal of proper analysis is to stay on top of everything that affects your trade. While some trades will look like a no-brainer in your favorite timeframe, another relevant timeframe may disagree.
• Don’t eye everything – A day trader shouldn’t spend a lot of his or her time eyeing the monthly candlestick charts; they do very little to affect what happens in minutes. Likewise, a long-term trader should avoid the noise of the short-term candlesticks, as the small, but frequent, movements are not important to their long-term analysis.
• Become a mini-expert – You can’t become an expert on everything. If you spend your time searching through every single timeframe you’ll waste your time and make less accurate trades. A few timeframes is better than looking at every single one.

Eyes on the Prize

Successful forex traders don’t spend their time on what doesn’t make them money. Traders who fail do spend their time on what doesn’t make them money. This is the very big difference between those who succeed and those who don’t: how traders spend their time.

If you’re new to the foreign exchange market, then a little experimentation is perfectly fine—you’re still trying to find a trading strategy and method of analysis that works for you. That’s perfectly reasonable, and we encourage everyone to go slowly in picking and choosing sides in the forex market before understanding what kind of trader they want to be.

But once you make a decision to pick a timeframe, pick it and stick with it. There is no difference between the amount of money that short-term and long-term traders can make. There is only a difference between what works for you and what doesn’t.

Now that we’ve covered multiple time frame analysis, we’re ready to break into very serious fundamental analysis. This lesson was important to get out of the way, though, as even fundamental traders need to be aware of multiple timeframe analysis.