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Multiple Timeframe Cheat Sheet 

Last Updated: December 29, 2020

By Rayner Teo

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In today’s episode, you’ll discover a multiple timeframe cheat sheet which will improve your trading results.

So tune in right now…

Resources

Price Action Patterns That Work

High Probability Trading Strategy — A Complete Guide

Support and Resistance Trading Strategy — The Advanced Guide

Transcript

Hey, hey, what’s up, my friend? In today’s episode, we’ll be discussing multiple timeframes and how you should use it correctly.

Because often I’ve seen traders using multiple timeframes in the wrong way. They think they just need to flip through some charts from the 1-hour to the 4-hour to the daily to the weekly timeframe and that’s multiple timeframes analysis – that should help their trading.

No, that couldn’t be further away from the truth. So in today’s episode, I want to share with you a very simple cheat sheet, so that things will make sense and will be relevant, to the timeframe that you’re trading.

First, let’s talk about…

How not to use multiple timeframes in your trading

Often I see traders enter their trades on let’s say the 15-minute timeframe but their higher timeframe is on a monthly timeframe – and that’s ridiculous.

That’s like trying to say you have a hot neighbour and you want to spy on them using a satellite space station when you could have picked up a ladder, climbed into the house and then spy on them.

It doesn’t make sense because it’s too far away. This is the same as entering your trades on the 15-minute timeframe, and then going up to the monthly timeframe for your higher timeframe analysis. It’s irrelevant to you.

Or how about this, let’s say you’re entering your trades on the daily timeframe but you go down to the 5-minutes timeframe to time your entry. Again, this doesn’t make sense too.

Because whatever you see on a 5-minutes timeframe will be noise to you on the daily timeframe since you’re going down too much into the granular details which are irrelevant to what you’re trying to accomplish.

Similarly, this is like you’re trying to cross the road by using a magnifying glass to check for oncoming traffic trying to see whether there’s any incoming traffic. It doesn’t make sense.

So don’t make these mistakes when it comes to multiple timeframe trading. You don’t want to look at timeframes which are too far away nor too detailed, which are irrelevant to your trading.

Now the question is, how do you apply multiple timeframes to your trading?

Use a factor of 4 to 6 for multiple timeframes

(I want to credit Adam Grimes and Dr Alexander Elder because I learned this technique from them.)

I believe one of them mentioned a factor of 3 to 5. But I think 4 to 6 suits me well. How this works, is that let’s say you’re entering your trades on the 15-minute timeframe you can use a factor between 4 to 6, you’ll take that factor and multiply by your trading timeframe.

For example, on the 15-minute timeframe, if you multiply by 4, that’s 60 minutes, which is equivalent to the 1-hour timeframe. So the 1-hour timeframe can be your higher timeframe for the 15-minute timeframe that you’re entering your trade on.

Or if you’re going with a factor of 6, that’s possible as well. That higher timeframe will be the 90-minute timeframe, which is a factor of 6 for the 15-minute timeframe. Anywhere between a factor of 4 to 6 is perfectly fine if you ask me.

Likewise, let’s say the daily timeframe is your trading timeframe and maybe you want to better time your entry on the lower timeframe. How do you define what’s a suitable lower timeframe? Well again, you can use a factor of 4 to 6.

Let’s keep things simple. If you trade on the daily timeframe and you trade the FX markets. With 24 hours making up a day, if you go by a factor of six, your lower timeframe will be the 4-hour chart. You can use the 4-hour chart to time your entry better on the daily timeframe you’re trading on. Does it make sense?

Bear this in mind, when it comes to multiple timeframe analysis, anywhere between a factor of 4 to 6 is the ‘sweet spot’.

Of course, if you’re a pro trader, you can tweak this factor to your preference, it’s entirely up to you. But if you’re new to trading and still not getting the hang of things, then remember this factor of 4 to 6 when it comes to multiple timeframe analysis.

With that said I wish you good luck and good trading. I will talk to you soon.

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