Multiple Time-Frame Analysis

Multiple timeframes analysis equals using 2 chart time-frames to trade Indices Trading - a shorter one used for trading & a longer one to check Indices trend.

Since it is always good to follow the market 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 time-frame then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term indices trend will eventually save you. Also if you trade with direction of the market, then mostly you will be on the winning side, this is what this analysis is all about.

Remember there is a popular saying by many Indices Trading and stock market investors that says: 'The indices trend is your friend' - never go against the stock indices trading market.

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

Examples of how each type of Indices trader uses multiple Stock Indices Trading time-frames analysis strategy:

Scalpers

This group holds on to their trades for only a few minutes. Scalper never holds on to a trade for more than ten minutes. With the objective of making small amount of pips profit: 5 - 20 pips.

A Scalper using 1 minute chart wants to go long, checks 5 minute chart, which looks like the one below, since 5 minute show indices trend is going up, then decides from this analysis it's ok to buy.

Best Time Frame to Trade Indices

Day Traders

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

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

Best Time Frame to Trade Indices

Swing Traders

This group holds on to their trades for a few days to a week. With the objective of making a large number of pips: 100 - 400 pips.

Swing trader using 1 hour chart wants to go short, checks 4 hour chart, which looks like the stock indices trading example explained and illustrated below, since 4 hour shows the indices trend is going down, then decides from this analysis it's ok to sell.

Best Time Frame to Trade Indices

Position Stock Indices Traders

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

Position trader using the daily chart wants to short, checks weekly chart, weekly looks like one below, since weekly shows the indices trend is going down, then decides from this analysis it's ok to sell.

Best Time Frame to Trade Indices

How to Define A Indices Trading Trend

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

Upward trend

Both MAs Moving Up

RSI above 50

MACD Above Centerline

Downwards Stock Indices Trading 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 Indices Trading System.