Multiple Time-Frame Analysis

Multiple timeframes analysis equals using 2 chart time frames to trade cfd - a shorter one used for trading and a longer one to check the 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 timeframe then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term trend will eventually save you. Also if you trade with direction of 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 CFD Trading and stock market traders that says: 'The cfd trend is your friend' - never go against the market.

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

Examples of how each type of trader uses multiple time frames analysis trading strategy:

Scalpers

This group holds onto 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 amounts of pips as profit, 5 - 20 pips.

A Scalper using 1 minutes chart wants to go long, checks 5 min chart, which looks like the one below, since 5 min show cfd trend is going up, then decides from the analysis it is okay to buy.

Day Traders

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

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

Swing Traders

This group of traders holds on to their trades for few days to a week. With aim to make a big number of pips: 100 - 400 pips.

Swing trader using 1 hour chart wants to go short, checks 4 hour chart, which looks like the cfd example shown below, since 4 hour portrays the cfd trend is going down, then decides from the analysis it's ok to sell.

Position traders

These are investors who hold on to their trades for weeks or months. With the aim to make a big number of pips: 300 - 1000 pips.

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

How to Define A Trend

Using a cfd system has 3 indicators - Moving Average Cross-over System, RSI and MACD and uses simple guidelines to define the trend. The rules are:

Upward trend

Both MAs Moving Up

RSI above 50

MACD Above Center-Line

Downward CFDs Trading Trend

Both MAs Moving Down

RSI below 50

MACD Below Center Line

For More explanation about this system read: How to Generate Signals With a CFD System.