Multiple Time Frame Analysis

Multiple Time Frame (MTF) Analysis is a trading strategy that involves examining price movements and trends across different time frames to gain a comprehensive understanding of the market.

Different time frames reveal different aspects of the market. A longer time frame (daily, weekly) can show the overall trend, while a shorter time frame (hourly, 15-minute) helps pinpoint entry and exit points.

Using this analysis can significantly improve the odds of success for a trade.

The first step in MFT is to look at the longer-term time frame to identify the primary trend. This chart will provide the big picture and give the trader a sense of the overall direction of the market, helping identify the major trend. Usually it is done using a weekly time frame.

Once the major trend is identified, trader can move to a shorter time frame to find more specific trade setups. This allows to narrow down the focus and identify potential entry points within the primary trend. A good choice for most traders during this step are daily and 4-hour or 1-hour charts.

Lastly, move to an even shorter time frame (like a 15-minute or 5-minute chart) to pinpoint an optimal entry. This step helps to enter at the best price possible within the broader trend identified on the higher time frames.

By starting with the longest time frame first and confirming that all trends align, traders avoid chasing the market or entering trades against the trend. This approach increases chances of successful trades by ensuring trading with the larger market direction.

Trading with multiple time frames doesn’t require a complete change of the trading strategy. The core strategy, whether it is trading price action, using indicators, scalping, or any other, remains the same. This approach simply helps to make better-informed decisions by understanding the broader market context.