Multiple Time Frame Analysis

Multiple time frames analysis equals using 2 chart time-frames to trade oil - a shorter one used for trading and a longer one to check Oil trend.

Since it is always good to follow the trend, in Multiple Timeframe Analysis, the longer time frame gives us the direction of the longterm trend.

If the long-term market direction supports the direction of the smaller chart time frame then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term trend will eventually save you. Also if you trade with direction of the market, then mostly you'll be on the winning side, this is what this analysis is all about.

Remember there's a popular saying by many Oil Trading and stock market investors that says: "The trend is your friend" - never go against the crude market.

There are four different types of Oil traders - all these use different charts to trade as described below.

Examples of how each type of trader uses multiple time frames analysis trading strategy:

Scalpers

This group holds onto their trades for only a few minutes. Scalper never holds on to a trade for more than ten minutes. With the objective of making a small amount 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 trend is moving up, then decides from the analysis it is ok to buy.

Day Traders

This group holds on to their trades for few hours but not more than a day. With the main aim to make quite a number of pips, 30 to 100 pips.

Day trader trading 15 min chart wants to go long, checks 1 H chart, which looks like the one below, since 1 hour highlights market trend is moving up, then decides from the analysis it is ok to buy

Swing Traders

This group holds on to their trades for a few days to a week. With aim to make a big number of pips profit, 100 to 400 pips.

Swing trader using 1 H chart wants to go short, checks 4 hour chart, which looks like the example shown below, since 4 hour highlights the trend is moving down, then decides from the analysis it is ok to sell.

Position traders

These are traders that hold onto their trades for weeks or months. With objective to make a large number of pips, 300 to 1000 pips.

Position trader using the daily chart wants to short sell, checks weekly chart, weekly looks like one below, since weekly highlights the trend is moving down, then decides from the analysis it is ok to sell.

How to Define A Trend

Using a oil system has 3 indicators - MA Crossover System, RSI and MACD and uses simple guide-lines to define the trend. The rules are:

Upwards trend

Both MAs Moving Up

RSI above 50

MACD Above Centerline

Down-wards Trend

Both MAs Moving Down

RSI below 50

MACD Below Centerline

For More explanation about this system read: How to Generate Trading Signals With a Oil System.