Multi-timeframe analysis is a well-known trading skill, but does it really work?

In fact, many Traders use multiple timeframes to trade when the trends on the timeframes go in the same direction, thus increasing the win rate and profit and loss ratio when trading. The theory seems reasonable, but in practice, you will be very hard to find when the trends are all going in the same direction, and therefore your chances of entering will also be very low.

Take a look at the following example:

  • If you intend to enter a buy position on the H1 frame because the H4 is trending up, your timeframes may not go together. Usually the H1 frame will go in the opposite direction from the H4 frame.
  • If the H4 frame chart is breaking out of the sideways price zone, usually the H1 frame has a very strong trend forming.
  • A sideways market on the daily or H4 frame, Traders can still trade according to the trend on the H1 frame.

The inconsistency between daily and weekly charts in Crude Oil (crude oil) market​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

As you can see, it is very difficult to have a trade that follows the same trend on all timeframes. Usually, different time frames will have conflicts between trending or sideways market periods.

On the other hand, when using the multi-timeframe method, you are forced to analyze many charts at the same time (on the same type of financial product) thus complicating the process you analyze. Many studies show that multitasking is difficult to achieve high productivity. We can't do 2 things at the same time. What we're really doing is often shifting focus, you focus and solve problem A then you can solve problem B and so on until the job is done.

Multi-timeframe analysis is important but you need to give up on waiting until the multi-timeframe trends are in the same direction to start trading. Try turning on the chart and see the most recent market price action to see this problem.

For better multi-timeframe analysis, you can refer to timeframe-shifting analysis method.

Timeframe Conversion Analysis Method

Switching timeframes means that you get different trading signals at different stages of a trend, depending on the timeframe you observe.

Convert from low time frame to high time frame

I will use the AUDCAD chart with 3 frames from left to right respectively H1, H4 and D1 to describe how to analyze time frame conversion.

With low timeframes like H1, the trading signal will come first (because it's the fastest). We will have a sell signal on AUDCAD at position number (1). When looking at the H4 chart during the entry process on the H1 chart, the H4 chart is still trading well above the 20 SMA and the H1 trend reversal seems to be just a pullback on the H4 chart. Price reversals on the H1 chart will be even harder to see on the daily chart.

This is also the reason why signals on the H1 frame (or any lower timeframe) are more likely to lose money than those on the larger timeframe.

The power of the time frame conversion method lies in the profit and loss ratio

However, this is also where the time frame conversion approach really shows its power: if a sell order on the H1 chart succeeds and the price falls, you will have an earlier entry point on the H1 chart. chart H4 (position number 2), your profit now will also be higher when H4 continues to decline. And if H4 is still capable of falling further, your profits will increase when the daily chart declines (position 3). An earlier entry point would easily turn the initial expected profit and loss ratio of 2:1 (or 2R) to suddenly 10:1 (or 10R). Super profit, so amazing! :cool:

Obviously, the risk on the H1 frame is always higher, but Trading is always risky. If you know how to choose risks wisely and confidently enter trades with high probability of winning, trade the multi-timeframe method (or to be more precise, time frame switching) now. help you be more successful and have huge profits.

Conclude

You see, multi-timeframe analysis doesn't always look as good as Traders expect. As long as you are still using multiple timeframes by waiting for the frames to align with the same trend, then you will still have to wait a long time for a good entry point.

What you should do is choose a key trading timeframe and make your trading decisions only within that timeframe, whether you are managing an order or looking for an exit point. Moving to another time frame to look for information that complements your analysis sometimes only complicates matters and leaves you in the wrong because this is not at the heart of the trading system you use.