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Chapter 23, Part II. Buy or Sell? Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 23, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Example of multiple time frame application

    Ok, now it’s time to show it in practice - how to make analysis using multiple time frame. This example will be a bit simple, because we have not passed other important material. At the end of our school, where we will study how to create a trading plan, there will be a more sophisticated example. Here we just want you to show the principle. After this example we will point out major rules, just to brush your brains, since you will have a lot of confusion when you will start to deal with multiple time frames. These rules will help you in this work. They are extremely important in applying multiple time frames.

    So, let’s assume that you do not have a lot of time to trade and the hourly chart is most suitable for you, because the 4-hour or daily is too long and boring, while 5-min is too fast and you are under stress when you trade it (and can’t assess situation and make decisions in time). All that stuff you should get from demo trading, as we’ve discussed.

    As a newbie trader you focus just on a single pair, say EUR/USD. Once, when you have finished all other businesses and finally are ready to dive in trading you’ve seen the following picture:


    Chart #4 | EUR/USD 240-min
    [​IMG]

    What decision you will make, looking at this chart?


    Pipruit: Well, probably that I should to search for buying opportunity.​


    Commander in Pips: Right, you should not even try to enter short. Here is why we need higher time frame. It gives us overall context – should we search for buy trade, sell or stay flat. But not only for that, as you will see later.

    The next step is to zoom into your preferable trading frame – 1 hour. Since the most common way to enter the market with an upward trend is to use the support of the trend line, you have to wait for when it will happen…

    Pipruit: I would like to add some indicator. Personally, I like Stochastic, can we do that?​
     
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