Looking for a way to better your entry and exit levels in the market? Or looking for ways to cut your losses and increase your gains? Look no further again, Multiple Time Frame is here to help.
What is a Multiple Time Frame? As the name implies, In the simplest form it means viewing and analyzing a trading pair like BTC/USDT or BNB/USDT, using different time frames. It’s a very simple tool and easy to use.
Using Multiple Time Frames gives you an overview of the market. Using Multiple Time Frames can be likened to the weather forecast update we receive every day because the forecast provides us an overview of what the weather will look like while the Multiple Time Frame provides us with an overview of what the market looks like.
Using a higher time frame gives us a more reliable signal and shows a stronger trend whereas the shorter time frame provides a less reliable signal which can only be used for short-term analysis. Why can’t the two timeframes be combined to provide more insight into our trade and give us more edge over other traders? This is what the Multiple Time Frame is all about. Multiple Time Frame gives you an edge over other traders who make use of the only one-time frame.
HOW IS THE MULTIPLE TIME FRAME ANALYSIS USED?
John wants to trade the BTC/USDT pair in the market, Before now John usually trades the market using the 4-hr time frame, He intends to use the knowledge of Multiple Time Frames that he learned, What would John do? John would open another chart of the same pair but with a higher timeframe than what he used to trade in a ratio of 1:6, which is 24-hrs, equivalent to a day. That is John would be focusing on two charts;
The Higher time frame which is the 1-Day time frame would be his higher time frame, right? From the higher time frame, He can find the overall market direction maybe it is an uptrend, downtrend, or if the market is ranging. He can also find key support areas and resistance in the higher time frame. This would enable John to take better decisions concerning the market. From the Higher time Frame, John can decide to either go long or short depending on his analysis.
The Lower Time Frame (which is the 4-hr time frame for John) After deciding whether to go long or short based on his analysis of the Higher time frame. He would then find his entry and exit level using the Lower time frame depending on his trading strategy or rule. If peradventure John becomes confused about where to make his entry or exit, He can then move to a time frame lower than the 4-hrs time frame he is using.
The insights from the higher time frame would prevent John from entering the market blindly.
In essence, You start by selecting your preferred time frame and then move to a higher time frame in the ratio of 1:6. The Higher Time Frame is the main trend, It shows the bigger picture of the market. The Lower Time Frame is used to determine the entry or exit level in the market.
Multiple Time Frames work for all types of traders be it Swing Traders, Positional Traders, or Day Traders, just use the ratio 1:6 to your current time frame. The selection of each time frame to be used depends on the type of trader you are.
Using 2 or 3-time frames is advisable, It should not be more than that so as not to confuse.
What are the benefits of Multiple Time Frames in our trades?
- Multiple Time Frame helps to reduce your losses and increase your gains in the market.
- It helps to better your precise entry and exit level in the market.
- Using Multiple Time Frames will help you to identify more trading opportunities.
- Multiple Time Frame helps you to spot key levels of support and resistance that may be close to your trade, but these levels cannot be seen in the time frame you are trading currently.
CONCLUSION
The knowledge of Multiple Time Frame if implemented well will help you become a better trader and reduce your losses in the crypto market.
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