Secret of Multiple Time-Frame Analysis Techniques (2)

Secret of Multiple Time-Frame Analysis Techniques (2)

In the previous article, we have discussed the basic principles of the Multiple Time-Frame Analysis method in forex trading. To facilitate writing – and of course: reading – we are short with MTFA . If you have not read the first part of this paper, I suggest to stop by this link for a moment: the secret of MTFA part-1 .

In the second part, we will discuss how to practice MTFA. Remember that in the first part of the article it has been explained that there are three time frames ( TF ) used to determine long, medium and short term trends. We term it with Long TF, Medium TF and Short TF .

Well, let’s start applying it in trading.

Combining all three time-frames

The combination of three time-frames to analyze a currency pair is expected to make it easier for you to find the “best” entry level instructions. Pay attention to the quotes that surround the word “best”. Actually there is no best level, because in fact we will never know when exactly the price will stop at a level. But we can try to find prices that are as cheap as possible if you want to buy, or as expensive as possible if you want to sell. So, the term “best” here is only to try so that we are not too fast or even late in making decisions.

With MTFA, the analysis carried out is ” top-down “. This means you have to see the biggest time-frame first, then gradually go down to a smaller time-frame. For example, if Long time-frame shows an uptrend but Medium time-frame and short time-frame show a downtrend, then you need to be careful if you want to open short positions.

Keep in mind that “the trend is your friend”. In this case, Long time-frame is the benchmark. So, as a “war strategy” you should wait until a smaller time-frame confirms the trend in a bigger time-frame.

Bottom line

MTFA can indeed help you to make transactions without worrying too early or too late to enter or exit the market. By itself, MTFA has the potential to provide the “best” entry level because the information you get can be more complete.

But don’t forget that it still requires carefulness and caution in carrying out any analytical methods. In addition, be aware that there is no single “defect free” analysis method. As a trading method, MTFA certainly also has weaknesses, one of which is that the time you need to do the analysis will certainly be longer than if you use the single time-frame analysis method .

Another weakness is a warning for beginners, because often those who experience floating loss try to find “justification” on a higher time-frame, often even to ” excessive ” for example to Daily time-frame, even though he is a day trader . Even in the MTFA rules, this is wrong.

For example: a trader opens a Sell position, but when the price rises and the floating loss experienced increases, he does not cut-loss but seeks justification by saying, “Ah … it’s okay. In MONTHLY time-frame it’s still stuck in resistance … “Even though it is a day trader who should never let open positions more than a day. This is clearly a justification effort that is wrong.

In essence, whatever method you use, keep having a standard trading 

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