How do you create more accuracy?
The idea behind higher time frames...
Everybody wants more consistency in their trading. It is universal. We all strive to be better, regardless of how good we already are. So how do you go about upping your accuracy? Looking at Multiple time frames can be a massive game changer!
We have all heard the quote "you can't see the forest for the trees". Well trading Forex is no different. If you stare at low time frame charts and do your analysis from there exclusively, you may find your stops getting hit all too often. Taking a big picture view, can give you the "real" direction of the market.
How to analyze your charts...
I like to break things into steps so they are easy to follow. First off, I take a look at the overall direction and market structure on the weekly time frame. This gives me a clear picture of overall momentum and structure. Then I mark my horizontal support and resistance levels followed by my trend lines.
Once the chart is marked up on the weekly, I drill down to the daily time frame and repeat the process and possible refine my levels from the weekly chart,
Continuing on down to the 4hour chart i keep doing the same process. See the 4 hour screen shot below
How to use smaller time frames...
So now we have our larger time frames taken care of.. what next? Well, we wait for things to line up. What does that mean??? We have to wait until the market structure on the lower time frames is going the same direction as the higher ones, only then can we think of entering a trade.
Going with the Trend, dictated by ALL TIME FRAMES is how we put the odds of success in our favour.
Take a look at the screen shot below to see how we can use the trend line from a higher time frame to enter on a lower one, in this case the 15 minute chart.
Setting profit targets
We now can see how powerful the overall real market direction is, and how to pick a great entry point. What about the targets? I like looking at the same time frame I placed the trade on for my targets. As you can see in the screen shot above I got a 4:1 Reward to Risk Ratio on that opportunity. Taking a look for the next support or resistance area is how I pick my profit targets.
My goal is to keep this, not super complicated...
Everything must be made as simple as possible, but not one bit simpler
Where to go from here?
Of course any new skill or process takes time to master. I suggest tracking your results with a journal to see how you make out with this concept. If you are looking for more detailed info, guidance, tools and techniques, feel free to check out the Free membership we have available.