Whenever you watch my analysis sessions on YouTube, you will often see me scrolling through multiple time frames on each pair.
I do this regardless of the time frame I am trading and for every pair that I trade – this includes commodities and cryptocurrency.
You may be thinking that this is a small part of my trading but in reality it is one of the most important steps in my entire trading ritual.
- Do you want higher quality entries, stop losses and targets?
- Do you want to have a stronger understanding of a pair’s price action?
- Do you want to know which potential setups are the strongest?
Then read on to learn how using multiple time frames in your analysis can help you achieve all of these goals and turn you into an even more profitable price action trader!
Why Should You Use Multiple Time Frames?
Before I show you how to use multiple time frames and what to look out for, let’s first understand what the point is. After all, understanding why we should add something to our trading routine will help us to implement any of those new steps.
There are three areas that using multiple time frames has a significant impact on. All three work together to elevate your trading to a much more advanced skill set.
1. Larger understanding of what recent data is telling you.
As price action traders we have one significant advantage with our trading style that most trading strategies do not have. That is the utilization of the most recent trading data to inform our trading decisions
However, a lot of price action traders don’t use this to its fullest potential. If you are looking at your pairs on the daily chart and that’s all, then you are missing vital information.
There are six H4 candles that make up a daily candle – each one tells us about the struggle between bulls and bears.
Those six candles give us much more detailed information on the struggle. Candlestick analysis is extremely important in crafting your trading decisions and these details enhance the quality of those decisions!
This extends beyond the daily chart though. If you are conducting your analysis only using one time frame then you are not seeing the complete picture of price action’s story.
As price action traders it is vital that we have a larger understanding of what recent data is telling us about price movement.
You do that, I guarantee you will see the quality of your analysis increase and therefore the quality of the trades you take.
2. Context of price movement
This ties in similar to our first point of understanding price action but goes one step further.
The context of price movement is crucial to prevent you from making bad trading decisions. Let’s say you trade on the lower time frames and look at the M5 – H2 time frames.
Once again, if you are stuck analysing a pair on one or two time frames you are playing a risky game. We need to see the context of where price is and what we can expect to see from the immediate future.
Is price trending on larger time frames? Is price pending for a continuation? What major support and resistance is coming up?
These are all questions about the context of price in the larger picture. Would you go short on the lower time frames when on the higher time frames price looks to be going long from support?
No, you wouldn’t! That is why using multiple time frames is vital in giving you context on where price is and what it will do. It allows you to question what trading decisions you can make that don’t increase your risk of an unnecessary loss.
3. Pinpoint your trade parameters
Every single trader understands the need for good quality entries, stop losses, and targets. It is baked into our skillset and it can take time to truly master placing trade parameters.
What a lot of people don’t realize is that using multiple time frames actually enhances your ability to place high quality trade parameters. It makes it easier to find good levels because you have a more precise picture of price action’s story.
Your candlestick analysis is going to get you far if you give it the chance to.
But if you just sit on one time frame you are not using your skills to their fullest potential. Candlestick analysis is what helps to get the absolute best trade parameters and that is done by getting a complete picture of price’s story.
How to Use Multiple Time Frames
So we know why we should use multiple time frames in our analysis – but what do I actually mean when I say to use them?
Don’t worry, it is really simple and easy to do. The hard part is making it a habit!
Whenever you look at a pair on whichever time frame you simply flick through time frames and analyse the pair on each.
I use Trading View and you can customize the time frames in the top left.
Now you don’t need to spend 5 minutes on each time frame. We still want to maintain time efficiency after all.
I like to start out by looking at the daily chart as that gives me the larger context of where price is and what to expect over the coming days or week.
This broader viewpoint helps to prevent me from making mistakes. Let’s take a look at this in the context of an example.
Price is trending down, on its way to support which is still a little way off.
Looking at the daily gives me this vital piece of information.
That means when I go to lower time frames I don’t make a decision that goes against the trend.
Why would I make that decision though? Well, when you go down to lower time frames you will see much more indecision. This is because there are simply more candles as opposed to the daily because we are looking at the details of price’s movement.
All this indecision can trick traders into thinking that a setup is forming. Afterall, we see indecision and that means there could be a trade, right?
Wrong. This is why context is so powerful. By looking at the daily chart first and understanding the current trend of price, I am now able to make better trading decisions when I shift to other time frames.
You can see how that context proved pivotal in this example with price pushing down to support after only a brief retrace.
So on any pair you trade, I recommend starting from higher time frames and working your way through to the lower.
It can be as quick as 5 seconds if there is no information you need, or it can result in some extended analysis to help you pinpoint a trade.
You can check out my daily analysis videos and see me do this on many of my pairs. As you become more advanced you will be able to spot potential setups on the 2 hour chart from the daily chart.
In order to get there though, you have to start from the beginning and train your eye. At the end of the day, spotting setups is crucial.
The Forex markets are open 24 hours a day, 7 days a week. The markets are always changing, and there are a million different factors that affect trading opportunities. It can be hard and stressful for people to do the trades on their own sometimes. In this situation, a lot of people choose to use a Forex Indicator. You need the right tools and to know how to use them in order to be successful at anything. As a Forex trader, the first thing you need to do is get indicators that help you make better trades. Great traders can’t be found without good indicators. The emotional factor is taken out of Forex Indicator. This means that feelings like greed or fear don’t get in the way of making smart, good choices.
A Forex Indicator also takes away the stress that comes with trading foreign currencies because it can look at all of the variables at once, which is something people can’t do. Forex Indicator makes decisions faster than people do, so you can jump on trading opportunities right away. With the help of forex expert advisors, you can trade more wisely and increase your chances of making money. But it’s also important to choose the right Forex Indicator, one that will keep you safe and make you money.
What Is Forex Indicator?
Before making trades on the markets platform, Forex traders look at different data to figure out how the market is doing and how it is likely to change in the future. With a thorough analysis of the market, traders should be able to use better trading strategies and make more money.
One way to look at market data is with forex indicators. Indicators try to predict how the market will act in the future by looking at past data, such as the price of a currency, how much of it is traded, and how well the market has done. Once traders have this information, they can make better trading decisions, which could lead to higher returns.
The Best Indicators for Forex
People are always looking for the best Forex indicators. While some indicators are more popular than others, there isn’t always one indicator that is better than the rest. Since there are many kinds of data, the best Forex indicators will depend on the kind of trading you want to do.
So, you shouldn’t act too quickly on information you got quickly. You might not get the advice you need from a quick look at an indicator or a summary of data, especially if your trading goals are different from the author’s or aren’t suited to the type of indicator you’ve looked at.
You can figure out which indicators are best for your trading career by figuring out what kind of trading you want to do and then figuring out how different indicators are.
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- Technical instruments and complex data aren’t just for the likes of experienced traders and professional analysts. In fact, indicators are a way to simplify extremely complex and voluminous data, and anyone can benefit from using Forex indicators.
- These indicators are part and parcel of the daily routine of forex traders whilst on their account, and forms an integral part in the decision-making process. The more knowledge you have about the market, how it works and what variables affect it, the more informed you will be.
- By making trading decisions based on past market activity and using previous currency patterns to inform your trading strategy, you could boost your returns and increase your profits.
- Strict Money Management
- You have to Master Yourself First
- Need Patience
- Need to control Emotions
- Must have to maintain Routine Life
- Requires Monitoring the Market for several hours
- You have to follow strict rules
How do indicators for Forex work?
There are so many technical indicators that it can be hard to choose just a few to use in a trading strategy. Some traders try out one indicator at a time, while others like to use a mix of indicators. Trend indicators, momentum indicators, and volatility indicators are the three main types of technical indicators that forex traders use.
Volume isn’t always seen as a reliable indicator on the decentralized forex market because there isn’t a lot of data about the volume of exchange trading. However, currency traders will sometimes use approximate volume numbers that they get by counting the tick movements of exchange rates.
Your strategy will be more complicated if you use more than one indicator. Even though there are exceptions, it’s usually best not to use two of the same type of indicator because they’ll just confirm each other’s signals. Instead, you should probably choose indicators that work well together.
Whether you decide to use one indicator or more, you will still have to choose which parameters to use. Some indicators have default settings that you should probably use at first. Some require you to choose a time frame for each bar, such as monthly, daily, weekly, or hourly. You might also have to choose a period, which is the number of bars that an indicator uses to figure out its value.
For instance, you can figure out daily moving average indicators for different time periods, such as the last 200, 100, or 50 days. Your strategy could be based on what happens when two or more moving averages cross over each other, or you could just use one moving average plotted over the exchange rate itself.
Indicators for Forex
Here are the different kinds of forex indicators that currency traders should know.
Type 1: Signs of a trend
“The trend is your friend” is a well-known saying among traders in the financial markets. Trend indicators can help you figure out which way trends are going and how strong they are so you can follow them. Here are some of the most common trend indicators.
The average direction change index
The Average Directional Movement Index (ADX) is a useful trend indicator that helps traders figure out how strong the underlying market trend is. It is made up of three parts: the ADX line, the Positive Directional Indicator (+DI), and the Negative Directional Indicator (-DI).
The ADX line is a smoothed moving average (SMMA) of the absolute values of the +DI and -DI components, and its value changes between 0 and 100. The standard period for the ADX is 14 bars, but you can try out different periods.
If the ADX value is between 0 and 25, there is little or no trend. If the ADX is between 25 and 50, the trend is strong. If the ADX is between 50 and 75, the trend is very strong. When the value is between 75 and 100, the trend is very strong.
Moving averages can also help you figure out which way a trend is going. The easiest way to do this is to plot a simple moving average on a chart and then check if the exchange rate is above or below the moving average. If the exchange rate is higher than its moving average, that means that the pair of currencies is going up.
In the same way, you can compare two moving averages, like a 100-day MA and a 200-day MA. When the 100-day MA is higher than the 200-day MA, the indicators show that the price is going up. You can even trade based on when a moving average crosses over another.
It’s easy to use the Parabolic SAR indicator. Technical analysis software shows it as a series of dots above or below each candle or bar on a chart. When the dots are drawn above the exchange rate, it means that the market is getting worse. When the dots show up below the exchange rate, on the other hand, that means the market is strong.
The Parabolic SAR indicator is a great way to find changes in the market. If the dots move from above to below the exchange rate, that means a trend is starting to go up. If the dots move from below to above, that means a trend is starting to go down.
One way to use the Parabolic SAR could be to wait for a change to signal a change in direction. Then, make a trade in the direction shown once four dots in a row show that the move is real.
Type 2: Signs of movement
This group of forex indicators measures how quickly exchange rates change. Some people also call them rate of change indicators.
Index of relative strength
The Relative Strength Index, or RSI, can help you figure out if a currency pair has been overbought or oversold. The default calculation period is 14 candles or bars, and the value of the RSI moves between 0 and 100. If the RSI is 70 or higher, it means that the currency pair has been bought too much, while a reading below 30 means that it has been sold too much.
Moving Average Convergence Divergence Oscillator (MACD Oscillator)
Another way to measure momentum is with the Moving Average Convergence Divergence (MACD) oscillator. Sometimes it is shown with two lines (MACD and signal) and a histogram, and sometimes it is shown with just one signal line and a histogram.
“MACD(A,B,C)” is a common notation that means the MACD series is the difference of two exponential moving averages (EMAs) with periods A and B, and the average series is an EMA of the MACD series with period C. Most traders use the default setting of A=12, B=26, and C=9 periods, or MACD (12,26,9).
Using these standard values, the MACD line is found by taking the difference between the 26-day EMA and the 12-day EMA and adding it to 0. The MACD line’s 9-day exponential moving average (EMA) is the signal line, and the difference between the MACD line and the signal line is the MACD histogram.
Traders can look for the MACD line to cross over the signal line when the histogram changes direction. This could be seen as a buy signal if the MACD line crosses above the signal line or a sell signal if the MACD line crosses below the signal line.
The MACD line crossing its horizontal axis is another kind of MACD crossover. This means that the values of the fast and slow EMAs are the same. When the MACD line goes negative, it’s a sign that prices will go down, and when it goes up, it’s a sign that prices will go up.
Traders might also look for a difference between the exchange rate and the MACD to show a change in market momentum that could lead to a reversal. So, if the exchange rate makes a higher high but the MACD makes a lower high, that would be a sign that the trend is about to change in a bearish way. On the other hand, a bullish reversal signal would be if the exchange rate made a lower low but the MACD made a higher low.
Other Signs of Progress
Some traders also use the stochastic oscillator to show how the market is moving and to figure out when prices are too high or too low. Some traders who are more experienced might use the Ichimoku Kinko Hyo system, which is a complicated technical indicator with a graph that can help them figure out how the market is moving. It is made up of support and resistance levels, crossovers, oscillators, and trend indicators.
Type 3: Indicators of Volatility
You can use Bollinger Bands to figure out how volatile a currency pair is. Before you can put them on a chart, you need to figure out their standard deviation and moving average. Then, you add two standard deviations to the moving average and subtract two standard deviations from the moving average to make lines above and below the moving average.
Some traders wait for the exchange rate to go above the upper band or below the lower band. This is a sign that they should sell or buy. This strategy works best in a market that goes up and down a lot but usually goes back to its average value.
Average True Range
Average True Range (ATR) is found by taking the exponential moving average (EMA) of the difference between the day’s high and low exchange rates, or between the day’s high and close, or between the day’s close and low exchange rates. The ATR is used to measure how volatile something is, and it can also be used to help manage risks.
As was mentioned above, it is not as easy to see volume on the decentralized forex market as it is on markets that are mostly exchange-traded. By counting the number of ticks in the exchange rate, you can get an idea of the volume, which can be used to calculate some useful indicators.
Money Flow Chaikin
One example is Chaikin Money Flow (CMF), which is a volume-weighted average of accumulation and distribution over a certain amount of time, usually 21 days. It can move between 1 and -1, but most of the time it moves between 0.5 and -0.5. Values above zero show that there is pressure to buy, while values below zero show that there is pressure to sell.
Distribution Line of Accumulation
The Accumulation Distribution Line is also made with the help of volume data. When this indicator moves in the same direction as the exchange rate, it can help confirm a trend.
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FREQUENTLY ASKED QUESTIONS
The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. The foreign exchange market is the largest and most liquid financial market in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US $3.98 trillion in April 2010 by the Bank for International Settlements.
MetaTrader 4 indicators are powerful technical analysis tools which can help you to identify market trends and provide evidence for your predictions about future price movements.
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MT4 is a free trading platform. You can download it from the official web sites of your broker. Here is the list of most popular brokers.
First you need a computer with a minimal hardware configuration and a stable internet connection. Second you need to install Metatrader 4 trading platform. You don’t need to have any additional Forex knowledge.
You can use any broker that offers the Metatrader 4 trading platform. But for Best Result we suggest you to trade with most popular brokers.
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We know that the money is the main question. We know well that many people don’t have much money to get started. Our Indicator is made to be able to trade with a minimum amount of money. The minimum amount depends to your brokerage company too. You can start trading with a small amount as $5.
Every Forex Indicator is unique. Please check the guide before trading. If you don’t understand which one is suitable please contact us.
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Yes you can use. Please Backtest before using it in a real trading. Or use Demo Trade for at least one month with your broker spread and proper balance. Never use in live trading with any pair without demo testing. It is always better to invest time before losing any money.
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