Here are the best practices for using multiple time frames.
Notes
What is a time frame?
- Hourly Chart = 1 bar = 1 hour
- Daily Chart = 1 bar = 1 day
- Weekly Chart = 1 bar = 1 week
- Monthly Chart = 1 bar = 1 month
Smaller time frames show MORE DETAIL. Same information, but more granular
- 1 daily candle = 6.5 hourly candles or 13 30-min candles
- 1 weekly candle = 5 daily candles
- 1 monthly candle = 4 weekly candles or 20 daily candles
3-Time Frame Structure
Each trader that uses MTFA will select 3 Time Frames to use.
- Main time frame: Spend the majority of the time on this view. Identify patterns and usual S.E.T. on this time frame.
- Larger time frame: Identify overall trend and key support/resistance levels that might not have been obvious on the daily time frame.
- Smaller time frame: Use this to fine-tune your entries or exits. To find quicker entries/exits if the signals on the daily chart are too far away.
- Swing Trader (STEP System/Scouting Reports): Main = Daily chart. Larger = Weekly chart. Smaller = 30-min, hourly, 5-min
Best Practices with Using MTFA
- The best trades/setups have confluence across time frames. They paint a similar picture.
- Main: Bull Retracement. Larger: Bull Breakout
- The signals on larger time frames carry more weight – they trump.
- Signals on smaller time frames are quicker but noisier
Bull Retracement
Trigger 1) Buy above prior day’s high.
2) Buy above intraday resistance.
Stop Loss 1) Exit if stock breaks support
2) Exit if stock breaks intraday support
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