Best Time Frame to Trade CFDs
Multiple time-frames analysis equals using 2 chart timeframes to trade CFDs - a shorter one used for trading and a longer one to check the CFD trend.
Since it's always good to follow the trend, in Multiple Time Frame Analysis, the longer timeframe gives us the direction of the long-term trend.
If the long-term market direction supports the direction of the smaller chart timeframe then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term cfd trend will eventually save you. Also if you trade with the direction of cfd market, then mostly you'll be on the winning side, this is what this analysis is all about.
Remember there is a popular saying by many CFD and stock market investors that says: "The cfd trend is your friend' - never go against the cfds trading market.
There are four different types of CFD traders - all these use different charts to trade as explained below.
Examples of how each type of CFDs trader uses multiple CFDs Trading timeframes analysis strategy:
Best Time Frame to Trade CFDs
This group holds on to their trades for only a few minutes. Scalper never holds on to a trade for more than ten minutes. With the objective of making small amounts of pips as profit, 5 - 20 pips.
A Scalper using 1 minutes chart wants to go long, checks 5 min chart, which looks like the one below, since 5 min show cfd trend is going up, then decides from this analysis it is okay to buy.
Best Timeframe to Trade CFDs
Best Time Frame to Trade CFDs
This group holds on to their trades for few hours but not for more than a day. With the main objective to make quite a number of pips: 30 - 100 pips.
Day trader trading 15 minute chart wants to go long, checks 1 hour chart, which looks like the one below, since 1 hour shows market cfd trend is going up, then decides from this analysis it is ok to buy
Best Timeframe to Trade CFDs
Best Time Frame to Trade CFDs
This group of traders holds onto their trades for few days to a week. With main objective to make a large number of pips: 100 - 400 pips.
Swing trader using 1 hour trading chart wants to go short, checks 4 hour chart, which looks like the cfd example shown below, since 4 hour shows the cfd trend is going down, then decides from this analysis it's ok to sell.
Best Timeframe to Trade CFDs
Best Time Frame to Trade CFDs
These are the traders who hold on to their trades for weeks or months. With the aim to make a large number of pips: 300 - 1000 pips.
Position trader using the daily trading chart wants to short, checks the weekly chart, weekly looks like the one below, since weekly shows the cfd trend is going down, then decides from this analysis it's ok to sell.
Best Timeframe to Trade CFDs
How to Define A CFD Trading Trend
Using a cfd system has 3 indicators - Moving Average Crossover System, RSI and MACD and uses simple rules to define the trend. The rules are:
Upwards trend
Both MAs Moving Up
RSI above 50
MACD Above Centerline
Downward CFDs Trading Trend
Both MAs Moving Down
RSI below 50
MACD Below Centerline
For More explanation about this system read: How to Generate CFD Signals With a CFD System.
