Multiple Time Frame Trading

[Trader J 10]

Does anyone have a consistent (> 2 years) track record of multiple time frame trading? Would you be willing to share your experiences? (private or public)

 

I have spent a number of years on multiple time frame trading. The concept at the time seemed appealing and “logical”. When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money.

 

It also seemed appealing to have more market opportunities because one is trading a lower time frame.

 

Somehow I just never worked for me. It never made more money than just trading End of Day.

 

There are enough stories and articles on the internet that multiple time frame trading “works”. However, in the last 12 years I have come across only one trader with consistent and actual results.

 

I would be interested to hear other people’s experience with factual results or with trade examples posted before they actually happen.

[Adrian 10]

Do you have any thoughts on why it didn't work for you?

[scar9801 10]

Hmmm... every method works with proper management .... !!

 

For a multiple time frame U may need to develop an eye to analyse what can happen next ....

 

actions always starts at the lower time frame and steadily progress towards higher time frame ... this will give you very nice entry and exit... i recommend u RSI logic by walter baeyens ...

Main focus of the book is RSI... but in later chapter author gives us very nice understanding of multiple frame correlation ....

[Tams 20]

Does anyone have a consistent (> 2 years) track record of multiple time frame trading? Would you be willing to share your experiences? (private or public)

 

I have spent a number of years on multiple time frame trading. The concept at the time seemed appealing and “logical”. When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money.

 

It also seemed appealing to have more market opportunities because one is trading a lower time frame.

 

Somehow I just never worked for me. It never made more money than just trading End of Day.

 

There are enough stories and articles on the internet that multiple time frame trading “works”. However, in the last 12 years I have come across only one trader with consistent and actual results.

 

I would be interested to hear other people’s experience with factual results or with trade examples posted before they actually happen.

 

 

 

I don't know of any trader who does not use multiple time frame in trading.

[Qiman 10]

I don't know of any trader who does not use multiple time frame in trading.

 

Al Brooks immediately comes to mind, he has an almost religious devotion to just using a single 5 minute chart on his laptop. I would imagine some of the followers of his method and site do the same . . .

[ForexTraderX 10]

Does anyone have a consistent (> 2 years) track record of multiple time frame trading? Would you be willing to share your experiences? (private or public)

 

I have spent a number of years on multiple time frame trading. The concept at the time seemed appealing and “logical”. When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money.

 

It also seemed appealing to have more market opportunities because one is trading a lower time frame.

 

Somehow I just never worked for me. It never made more money than just trading End of Day.

 

There are enough stories and articles on the internet that multiple time frame trading “works”. However, in the last 12 years I have come across only one trader with consistent and actual results.

 

I would be interested to hear other people’s experience with factual results or with trade examples posted before they actually happen.

 

Huh.... I'm kinda with Tams here... the vast majority of successful day traders I know use multiple time frame analysis methods. In fact... I can't really think of a single one who DOESN'T look at more than 1 time frame. I'm sure they're out there... but I bet they are in the minority.

 

Now, if we look beyond day traders, to longer term investors, position traders, etc... I'd say that probably the majority of these don't look at much under a daily chart... but they may use weekly and monthly charts, which would still be multiple TF analysis.

 

As far as someone who posts stuff up before it has "triggered", or a live track record, and what not... I guess i'm as good as any on a public, anonymous forum that is built to cater to an audience who is seeking millions of dollars in riches while sitting at their home computer.

 

Here's my thread : http://www.traderslaboratory.com/forums/market-analysis/13737-watch-typical-day-real-day-trader.html

 

you'll have to go through it carefully to see the examples, as I often post "live updates" of trades and opportunities that I'm watching or trading, and a lot of that stuff won't make sense unless you were to open your own charts and follow along...

 

I also post my trading results on myfxbook (link is in my signature). It's a real money account, and it's independently verified...so, what your seeing is what I do.

 

But i'd suggest you read the first page of my thread. If you can't be bothered to read through it, then i'd say skip to page 25, and then start reading.

 

And yea... I actually look at every time frame from 1 min up to monthly, and when i'm trading or managing a day trade, I'm usually flipping through a variety of charts, usually the 1 min, 5 min, 15 min, 1 30 min, and 1 hr, and of course the daily chart. I look at many different factors, some of which are:

 

- a "market profile" of sorts on each time frame, with the intention of finding very clear "MP trade worthy" levels that have 2 more more time frames with a high degree of confluence between each one.

 

- a reversal candle on a larger TF (say, a bearish engulfing daily candle)... I will then watch the euro and or U.S. session to see if a great looking reversal candle (bearish of course) occurs on an intraday chart, particularly at a level of support or resistance (I like session/daily/weekly highs and lows for S/R, but market profile and other concepts I do use as well). This type of situation is most powerful if there is a deep retracement on the day following the bearish engulfing candle... because the deeper the retracement I can catch, the more likely that is going to be the high of that day...

 

- I'll watch a 1 min chart, and watch volume (for futures and stock trading this works best)... and see if the volume spikes are more often correlating with green candles, or red candles. This generally indicates aggressive buying or selling by larger players (thus the high volume spikes)... then, I will look to see if we also form a nice reversal candle (pinbar, engulfing, etc) on a 5 min or 15 min chart... a 1 hr chart is best. If this happens to correlate with the volume spikes in the 1 min charts (say, bullish 15 min pinbar at support, with my biggest volume spikes on my 1 min chart being nice green 1 min candles)... I'll look to get long... etc.

 

Just stuff like this, this is how I use multiple time frames. I do a lot more than this as well, but... I have to say, I'm wondering how much trading you've done, or specifcally, how much experience you have with day trading.... since almost everyone I know uses multiple time frames if they day trade... So much in fact do I rely on multiple time frames, that if I had to use only 1 TF to trade off of, I would choose the daily charts, and I would never day trade again. Period. It's that intrinsic to my trading.

 

Anyway, maybe this gives you a different perspective on multiple time frames? maybe not.. but I'm one trader who does do this successfully, professionally, and can't imagine trading without multiple time frames.

 

FTX

 

P.S. Really, read the thread. You will see probably over a dozen examples of how I use multiple time frames and multiple markets to line up very high probability opportunities.

[ForexTraderX 10]

Does anyone have a consistent (> 2 years) track record of multiple time frame trading? Would you be willing to share your experiences? (private or public)

 

I have spent a number of years on multiple time frame trading. The concept at the time seemed appealing and “logical”. When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money.

 

It also seemed appealing to have more market opportunities because one is trading a lower time frame.

 

Somehow I just never worked for me. It never made more money than just trading End of Day.

 

There are enough stories and articles on the internet that multiple time frame trading “works”. However, in the last 12 years I have come across only one trader with consistent and actual results.

 

I would be interested to hear other people’s experience with factual results or with trade examples posted before they actually happen.

 

As for examples... I JUST posted a breakdown, almost thought by thought, of a EUR/USD long i'm in right now from about 1.3060.

 

It's still going on, so I could totally fail here by the tiem you read this...however.... you can check out the last 2 or 3 pages in my thread to see what i'm talking about, and you'll see how I use a 1 min chart to help my decision making process

 

FTX

[BlueHorseshoe 10]

I have spent a number of years on multiple time frame trading. The concept at the time seemed appealing and “logical”. When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money.

 

It also seemed appealing to have more market opportunities because one is trading a lower time frame.

 

Somehow I just never worked for me. It never made more money than just trading End of Day.

 

To do what you describe here it is not totally necessary to look at charts in multiple timeframes. For example, you could look at a 5min chart and see what the longer term trend on an hourly or daily chart would be.

 

Why would you expect to be more profitable intraday than EOD? Trading intraday is expensive, whether or not you're profitable. With the infrequency and relative average excursion of EOD, all those costs become pretty negligible. And you can spend your day doing something else that provides a more consistent and dependable income.

 

BlueHorseshoe

[ForexTraderX 10]

To do what you describe here it is not totally necessary to look at charts in multiple timeframes. For example, you could look at a 5min chart and see what the longer term trend on an hourly or daily chart would be.

 

Why would you expect to be more profitable intraday than EOD? Trading intraday is expensive, whether or not you're profitable. With the infrequency and relative average excursion of EOD, all those costs become pretty negligible. And you can spend your day doing something else that provides a more consistent and dependable income.

 

BlueHorseshoe

 

Blue, I was wondering if you could clarify a few things for me... as far as more profitable... good call, trading is trading and profit is profit. However, a skilled and successful day trader will have a smoother equity curve than someone trading longer term simply because it is assumed that they are day trading because it allows them to act on a higher frequency of signals than just EOD trading signal(s) would arise.

 

This is not really a huge advantage in itself, but it can (and often for me does) help me move past the emotional impact that losing in the markets can have, as my losses affect my account equity for a shorter duration of time than a swing or position trader of comperable skill and win rate/reward:risk/etc.

 

Now, the one place you totally lose me is by saying trading intraday is expensive... implying it is more expensive than trading signals provided by using only EOD data....

If you mean in terms of time, ok, sure. But that's pretty abstract for the situation in which you made the comment. How is intraday trading intrinsiclly more expensive than EOD or any other form of trading?

 

FTX

[BlueHorseshoe 10]

Blue, I was wondering if you could clarify a few things for me... as far as more profitable... good call, trading is trading and profit is profit. However, a skilled and successful day trader will have a smoother equity curve than someone trading longer term simply because it is assumed that they are day trading because it allows them to act on a higher frequency of signals than just EOD trading signal(s) would arise.

 

I totally agree - and I agree with what you say next - even with a profitable swing trading strategy the gaps between trades during a drawdown can be deeply un-nerving.

 

Now, the one place you totally lose me is by saying trading intraday is expensive... implying it is more expensive than trading signals provided by using only EOD data....

If you mean in terms of time, ok, sure. But that's pretty abstract for the situation in which you made the comment. How is intraday trading intrinsiclly more expensive than EOD or any other form of trading?FTX

 

I suppose a more accurate thing to say would have been that 'higher frequency' trading is more expensive than 'lower frequency' trading. If you do a couple of roundtrips per month as a swing trader, and your average profit per trade is $500 on a single contract, then deducting $25 for slippage and another $5 for commission is no big deal.

 

If you do countless roundtrips per day then you have to be pretty sharp just to overcome costs. Costs also need to be taken into account when considering the equity curve for a daytrader - all the drawdowns become a little deeper, and all the peaks a little less high.

 

When you consider the floor traders, some of the main advantages that they seem to have had included minimal exchange fees and commissions, and priority execution on limit orders. They were the natural 'daytraders' before direct access electronic trading.

 

I think that profiatble daytrading is possible, and one of the main advantages would be the smoothing of the equity curve that you describe, but I think it's pretty difficult to achieve.

 

Hope that explains what I meant a bit more clearly.

 

BlueHorseshoe

[ForexTraderX 10]

I totally agree - and I agree with what you say next - even with a profitable swing trading strategy the gaps between trades during a drawdown can be deeply un-nerving.

 

 

 

I suppose a more accurate thing to say would have been that 'higher frequency' trading is more expensive than 'lower frequency' trading. If you do a couple of roundtrips per month as a swing trader, and your average profit per trade is $500 on a single contract, then deducting $25 for slippage and another $5 for commission is no big deal.

 

If you do countless roundtrips per day then you have to be pretty sharp just to overcome costs. Costs also need to be taken into account when considering the equity curve for a daytrader - all the drawdowns become a little deeper, and all the peaks a little less high.

 

When you consider the floor traders, some of the main advantages that they seem to have had included minimal exchange fees and commissions, and priority execution on limit orders. They were the natural 'daytraders' before direct access electronic trading.

 

I think that profiatble daytrading is possible, and one of the main advantages would be the smoothing of the equity curve that you describe, but I think it's pretty difficult to achieve.

 

Hope that explains what I meant a bit more clearly.

 

BlueHorseshoe

 

Ya, ok, I thought that's where you were going with this, and your right. Because most successful day traders I know who work retail trading from home are NOT higher frequency traders... most I know of take maybe 1-4 trades a day...while this is more than 1 or 2 trades a week like a swing trader might, they also may only take 3 or 4 trades in an entire week... thus, it's the "higher frequency" trading that costs, time frame executed on is irrelevant.

 

But it IS possible to have a relatively high frequency of trades, and be successful. I know that for a fact, because I do this myself. Click on the link in my signature, and you'll see for about 6 or 7 weeks of trading (when I started this whole live thing, mostly so people reading my thread know that I don't just talk, I trade.), i've built up over 1,300 round turns... that's about 40 trades per trading day. And this is spot forex, so there is a spread of between 1-4 pips on everything I trade.

 

Thats a lot of comission. But I'm still up 9.2% with a relatively smooth equity curve for this same time period. I have not had 2 consecutive weeks of drawdown, no more than 4% drawdown in realized loss and 6.5% in open positions AKA unrealized loss (it was a day of stupid trading for me, what can I say)

 

I trade very similar in my futures account, albeit maybe half as many trades...and only in USD based currencies (no cross currency trading of course)... and my costs are cheaper in futures because there is not a spread, just a comission (which is only a fraction of a pip compared to spot forex spreads) So I make more money there... by about 15%-25% depending on the month, so if we try to compare apples to apples, my profit would be about 10.5% - 13% for the same time period.

 

So ya. totally possible. But yes...it does require extracting more profits from relatively shorter moves...so the skill and technique required to be able to do so is more than it would be to swing trade.

 

But getting back to the whole time frame thing... I can't say if day trading is any more profitable than other trading. Profit isn't a function of time, as it is risk:reward rate and win rate combined.

 

But back to the topic here... day or swing or position or whatever... I think multiple time frame analysis is used by just about every successful trader I know. A few exceptions, yes...but the majorty I know use it.

FTX

[Trader J 10]

ForexTraderX,

I looked at your stats page. I appreciate that you are willing to share your trades.

 

Just a few questions:

Is it correct that you are up 9,2% for the year?

What was your starting capital?

Is the 9,2 % excluding costs, slippage etc?

[BlueHorseshoe 10]

Ya, ok, I thought that's where you were going with this, and your right. Because most successful day traders I know who work retail trading from home are NOT higher frequency traders... most I know of take maybe 1-4 trades a day...while this is more than 1 or 2 trades a week like a swing trader might, they also may only take 3 or 4 trades in an entire week... thus, it's the "higher frequency" trading that costs, time frame executed on is irrelevant.

 

But it IS possible to have a relatively high frequency of trades, and be successful. I know that for a fact, because I do this myself. Click on the link in my signature, and you'll see for about 6 or 7 weeks of trading (when I started this whole live thing, mostly so people reading my thread know that I don't just talk, I trade.), i've built up over 1,300 round turns... that's about 40 trades per trading day. And this is spot forex, so there is a spread of between 1-4 pips on everything I trade.

 

Thats a lot of comission. But I'm still up 9.2% with a relatively smooth equity curve for this same time period. I have not had 2 consecutive weeks of drawdown, no more than 4% drawdown in realized loss and 6.5% in open positions AKA unrealized loss (it was a day of stupid trading for me, what can I say)

 

I trade very similar in my futures account, albeit maybe half as many trades...and only in USD based currencies (no cross currency trading of course)... and my costs are cheaper in futures because there is not a spread, just a comission (which is only a fraction of a pip compared to spot forex spreads) So I make more money there... by about 15%-25% depending on the month, so if we try to compare apples to apples, my profit would be about 10.5% - 13% for the same time period.

 

So ya. totally possible. But yes...it does require extracting more profits from relatively shorter moves...so the skill and technique required to be able to do so is more than it would be to swing trade.

 

But getting back to the whole time frame thing... I can't say if day trading is any more profitable than other trading. Profit isn't a function of time, as it is risk:reward rate and win rate combined.

 

But back to the topic here... day or swing or position or whatever... I think multiple time frame analysis is used by just about every successful trader I know. A few exceptions, yes...but the majorty I know use it.

FTX

 

I don't trade spot fx, but someone who does recently told me that some brokers keep the same spreads (roughly) as the futures contract trades with, but then charge a fixed commission - this would allow you to trade the cash without the hassle of massive spreads.

 

BlueHorseshoe

[ForexTraderX 10]

I don't trade spot fx, but someone who does recently told me that some brokers keep the same spreads (roughly) as the futures contract trades with, but then charge a fixed commission - this would allow you to trade the cash without the hassle of massive spreads.

 

BlueHorseshoe

 

Yes, actually, well.... it's a centralized market, an ECN...problem is, there is often a real spread in the cross pairs (much like a real spread in the micro forex futures contracts, due to lack of liquidity and participation).... so from the couple I've looked into, it worked out to be about the same as my spot broker now. Now for limit orders it may be an advantage, but not so much that I've been compelled to go through the hassle of opening up another account with another broker...etc..etc.

 

In the not so distant future, I'll probably be looking into a more institutionalized setup, but since many trades I make translate to standard forex futures contracts, and the tax benefits of futures trading (in the US)... it works out well enough for me for now.

 

Anyway, back to multiple time frame discussions...

 

FTX

[4EverMaAT 10]

I don't trade spot fx, but someone who does recently told me that some brokers keep the same spreads (roughly) as the futures contract trades with, but then charge a fixed commission - this would allow you to trade the cash without the hassle of massive spreads.

 

BlueHorseshoe

 

Retail forex has become much more mature over even the past 2 years or so. Spreads + commissions on the majors are fairly competitive, especially with the 'pro' accounts that may require deposits of $5-10K or more. I've always said the major advantage is the small position sizes + leverage. you can trade contract sizes from 1 unit of base currency with Oanda, but most brokers require 1000 units minimum per order, with a few expanding to 100 units. XeMarkets does 10 units minimum in their micro accounts, plus you have custom programming (automation tools) at your disposal with platforms like cTrader and Metatrader.

 

I don't know of any trader who does not use multiple time frame in trading.

 

I'm going to be the black sheep on this one. There was quite a lengthy post on a LinkedIn group on algorithmic trading talking about which multiple time frames to use for analysis. Here was my response:

 

I've gotten rid of doing "time-shifting" once I understood completely that 100 pip/tick move is 100 pips regardless of the timeframe. Instead of trying to decipher all these ambiguous patterns that are skewed by the timeframe and your own biases (seeing what you want to see), focus on net price movement, and then make an entry/exit trading decision. Much more mechanical and you can actually automate the process of measuring the trend length.

 

I can't argue with someone's individual method; if you want to chase down multiple time frames, then fine. I've seen that this method artifically skews price movement as you don't account for what happens intrabar. Compression, whether 1 minute or 1 week bars, are best suited for getting a glance of the range of price movement that occured during that time. True ranges need to be calculated in real time, without smoothing.

[BlueHorseshoe 10]

There was quite a lengthy post on a LinkedIn group on algorithmic trading talking about which multiple time frames to use for analysis.

 

Hi,

 

Please would you post or PM me a link?

 

Cheers,

 

BlueHorseshoe

[Obsidian 10]

...When larger time frame participants trade in one direction, lower time frame participants can “log on” to the existing trend and in the process make some money...

 

sometimes it is better to ride the wave, instead of going in and out for smaller bites. you can earn more than lower time frame participants

[Vince50 10]

Trader,

 

Does anyone have any documentation of winning consistantly on just one time frame!? I am going to make a large wager that small time frame guys 2-15m charts are getting killed in forex. In fact im using a professional harmonic trading program im losing money with because its using plays mostly on the 15-30-60 min time frame. the system i have using daily charts is doing fine. So lets change the question a bit: what is anyone using thats doing well consistantly on any time frame? I bet guys using weeklys are not complaining at all! thsi is the time to be swing and position trading.day traders both trend and non trend are both getting reamed. Am I right,boys?

[4EverMaAT 10]

Hi,

 

Please would you post or PM me a link?

 

Cheers,

 

BlueHorseshoe

 

http://www.linkedin.com/groupAnswers?viewQuestionAndAnswers=&discussionID=173529102&gid=62719&commentID=100571118&trk=view_disc&ut=2GKOyl3gG0z5s1

 

LinkedIn groups and discussion thread posts are not the same like a more open forum. You have to join the group (Algorithmic Trading). You cannot link to each individual post directly.

[Vince50 10]

sometimes it is better to ride the wave, instead of going in and out for smaller bites. you can earn more than lower time frame participants

 

I not only agree with you 100%, but if you notice in all of the Market wizard traders who made millions, I dont recall one being a scalper. Maybe getting in and out on news or a special reason or event, but can one person on this board show me a scalper who made a fortune? Tell you what, show me a scalper, in stocks or futures who can even make 50k a year or more. In Forex its almost impossible due to the spread...which by the way Im making a prediction and you can say you heard it here from me first. I dint just come up with this today...or last month. Due to the fact that more and more Forex traders are seeing with their own eyes and wallets that they cant win scalping, the way that in equities we went from a fractionaL SYSTEM TO A POINT BASIS SYSTEM OF SPREADS, i PREDICT THE WHOLE FOREX INDUSTRY WILL TRY TO WOO SOME OF THE SCALPERS BACK,AND EVEN AWAY FROM EQUITIES BY HAVING NO SPREAD ON MAJOR PAIRS BE MORE THAN 1 PIP! wATCH, IT WILL HAPPEN WITHIN 3 YEARS. There may be requirements to get that spread such as 20 trades a day or more but it will be offered. I also suspect they may start letting us the retail trader buy in between the spread...the way it is supposed to be!!!!!

[Obsidian 10]

...

I bet guys using weeklys are not complaining at all! thsi is the time to be swing and position trading.day traders both trend and non trend are both getting reamed. Am I right,boys?

 

Anything larger than daily is beyond my limits..I would like to take profit every month (if I can), instead of years

[ForexTraderX 10]

I not only agree with you 100%, but if you notice in all of the Market wizard traders who made millions, I dont recall one being a scalper. Maybe getting in and out on news or a special reason or event, but can one person on this board show me a scalper who made a fortune? Tell you what, show me a scalper, in stocks or futures who can even make 50k a year or more. In Forex its almost impossible due to the spread...which by the way Im making a prediction and you can say you heard it here from me first. I dint just come up with this today...or last month. Due to the fact that more and more Forex traders are seeing with their own eyes and wallets that they cant win scalping, the way that in equities we went from a fractionaL SYSTEM TO A POINT BASIS SYSTEM OF SPREADS, i PREDICT THE WHOLE FOREX INDUSTRY WILL TRY TO WOO SOME OF THE SCALPERS BACK,AND EVEN AWAY FROM EQUITIES BY HAVING NO SPREAD ON MAJOR PAIRS BE MORE THAN 1 PIP! wATCH, IT WILL HAPPEN WITHIN 3 YEARS. There may be requirements to get that spread such as 20 trades a day or more but it will be offered. I also suspect they may start letting us the retail trader buy in between the spread...the way it is supposed to be!!!!!

 

 

Define "scalper"... ?

 

true scalping has long since gone the way of the algo HFT bot... because only they are fast enough to simultaniously have contracts on the bid and on the offer, and they have the speed to pull one side or the other (or both) should liquidity start to dry up...

 

so I'm not sure how you would define scalper... I daresay I am a successful "scalper"... but I don't limit my trades to small pips and time frames. I also hold trades for days... and for just the right trade, I'll hold it for months. But I average well over 30 round turn transactions per day, and my average hold time is a few hours, but I also have an average win size of about 21 pips, and and average losing trade size of about 17 pips...

 

If i'm really "scalping"... it's in futures, not spot, and there my average hold time is less than 30 minutes.

[BlueHorseshoe 10]

I not only agree with you 100%, but if you notice in all of the Market wizard traders who made millions, I dont recall one being a scalper.

 

Doh! Do you want me to drag the books down and make a list?

 

How about Tom Baldwin, just off the top of my head?

 

How about funds like RenTech, or the whole HFT industry? Early pioneers of this form of trading are featured in both books.

 

BlueHorseshoe

[BlueHorseshoe 10]

because only they are fast enough to simultaniously have contracts on the bid and on the offer, and they have the speed to pull one side or the other (or both) should liquidity start to dry up...

 

Being able to estimate liquidity accurately is also a crucial part of what the HFTs do - otherwise the speed is useless.

 

BlueHorseshoe

[ForexTraderX 10]

Being able to estimate liquidity accurately is also a crucial part of what the HFTs do - otherwise the speed is useless.

 

BlueHorseshoe

 

Ya ya... there's more to it of course, but I wanted to draw the distinction between the literal definition of what "scalping" is... from what we often refer to as "scalping" just because the trade isn't held for long, or only goes for a relatively small profit/loss point.

 

most people don't actually mean "scalping" when they use the word "scalping"

 

FTX