Multiple Time-frame Analysis in Stock Trading

Multiple time-frames analysis equals using 2 chart time-frames to trade stocks trading - a shorter one used for trading & a longer one to check the Stock trend.

Since it's always good to follow the trend, in Multiple Time-frame Analysis, the longer time-frame 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 stock trend will eventually save you. Also if you trade with the direction of stocks 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 Stock and stock market investors that says: "The stock trend is your friend' - never go against the stock market.

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

Examples of how each type of Stock trader uses multiple Stock Trading timeframes analysis strategies:

Scalpers in Stock Trading

This group holds onto their trades for only a few minutes. The scalper never holds on to a trade for more than ten minutes. With the aim to make small amount of pips profit: 5 - 20 pips.

A Scalper using 1 min chart wants to long buy, checks 5 minute chart, which looks like one below, since 5 minute illustrate stock trend is going up, then decides from this analysis it is okay to buy.

Day Stocks Traders

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

Day trader trading 15 min trading chart wants to go long, checks 1 Hour chart, which looks like one below, since 1 hour shows market stock trend is going up, then decides from this analysis it is okay to buy

Swing Stock Traders

This group of traders holds onto their trades for few days to a week. With main aim to make a large number of pips: 100 - 400 pips.

Swing trader using 1 Hour trading chart wants to short sell, checks the 4 Hour chart, which looks like the stocks example illustrated & explained below, since 4 hour shows the stock trend is going down, then decides from this analysis it is okay to sell.

Position Stocks Traders

These are the investors who hold on to their trades for weeks or months. With objective to make a large number of pips: 300 - 1000 pips.

Position trader using the daily trading chart wants to go short, checks weekly chart, weekly looks like the one below, since weekly shows the stock trend is going down, then decides from this analysis it is okay to sell.

How to Define A Stock Trading Trend

Using a stock trading system has 3 indicators - Moving Average Crossover System, RSI & MACD & uses simple rules to define the trend. The rules are:

Upwards trend

Both MAs Moving Up

RSI above 50

MACD Above Centerline

Downwards Stocks Trading Trend

Both MAs Moving Down

RSI below 50

MACD Below Centerline

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