Multi-Timeframe Analysis

Common Mistakes & Our Routine

The best method to understand the markets is by breaking down the whole market by looking at several different timeframes. However, it is a common thing across traders to make things to complicated by looking at several charts at the same time. The right approach is to have consistency in which timeframes to use and start to understand the bigger picture before scaling down to the lower and quicker timeframes.

Mistake one, and probably the biggest one across the beginning traders is that they start from the lower timeframes and form their trade ideas without looking at the bigger picture first. By doing this, trading consistently profitable will depend mostly on the luck that you trade with the bigger picture without even knowing it. Unfortunetely, most of the cases you will get stop hunted before you can see profitable results with this limited minded approach.

Instead of using the down-up approach, the key is starting at the Higher Timeframes (HTF’s) and work your way down to one of the intra-day charts for the trade execution and timing. Applying this method, won’t guartee you instant profitable returns, but it will show you the bigger picture and prepare you for a lot of unexpected events.

You’re probably asking yourself, which time-frames should I use? Well, that depends mainly on your trading strategy. However! In our opinion the best timeframes to apply in trading are the following:

1Hour: Only useful for trade execution if the intra-day chart shows you a clear price pattern, don’t trust candlesticks too much.

2Hour: Clear price action for structure trading.

4Hour: Extremely useful for trade timing and spotting deceleration in the markets. Also our main timeframe for trade execution and candlestick patterns.

Daily: Used for our daily predictions by applying technical analysis through pattern recognition, trends and supply and demand.

Weekly: Used to predict the upcoming week, and trade with that bias.

The second common mistake that is made in trading is forgetting that predicting the next daily candlestick is one of the most important factors in reaching consistency. Most traders think that they can improve their returns by analysing the intra-day charts, which might be possible but very unlikely based on the people we have mentored. Out of our experience, if you’re able to predict the next daily candle’s, you can just use the intra-days for better risk to reward. Instead of focusing on intra-days and getting trapped multiple times a week, focus on improving your daily predictions.

Our routine of analysing multiple timeframes can be described as a step to step process:

1. Start with the Weekly chart and look for what the trend is? Ask yourself if it is likely to see this trend continue or if there is any value nearby that can reverse this trend? Is the market over-extended + decelerating or is the market accelerating and just starting to take off? What is your bias for the upcoming week ahead?

2. Use the Daily chart to identify and draw the area’s of value in more detail. Ask yourself what price is doing at this moment and if it is similar price-action as shown at the weekly timeframe? Is the market volatility increasing or decreasing in the markets?