Friday, September 09, 2005

Multiple Time Frame analysis

The big picture or why great looking setups in your trading timeframe sometimes inexplicably fail:

  • Every time frame has its own structure.
  • The higher time frames overrule the lower time frames.
  • Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.
  • The energy points of support/resistance created by the higher time frame's vibration (prices) can be validated by the action of lower time periods.
  • The trend created by the next time period enables us to define the tradable trend.
  • What appears to be chaos in one time period can be order in another time period.

Author Perry Kaufman, Trading Systems and Methods -Third Edition published by John Wiley & Sons