Disclaimer: The views on the posts and charts are for educational and illustration purpose only, as past performance is not necessarily indicative of future performance. They are provided for general information only and therefore should not be taken as any offer or solicitation to do any investment or trade.
Note: Non-Members are strongly recommended to sign up for the online free course to have a better understanding of the setups as discussed below:
POEMS Mercury For Multiple Time Frames Trading
POEMS Mercury For Multiple Time Frames Trading
Do you know that POEMS Mercury Chartview has a Change Cycle feature that you can use for multiple time frames trade analysis? In this article, I will show you how you can make use of this feature to help you in your chart analysis. You can minimize your risk and increase the rewards not only for price action short term traders but also long term investors too. So, let’s start…
1.What is Multiple Time Frames Analysis
Multiple time frame analysis is a technique of analyzing different time frames of the same stock or trading product before entering a trade. It utilized 3 – 4 time frame charts starting from a longer time frame like the weekly chart to a shorter time frame like the hourly chart.
2.Why Multiple Time Frame Analysis ?
A Top Down Approach.
Hunting Your Stock Like An Eagle. A Top Down Approach.
In fundamental analysis, an investor may use a top down approach to start analyzing different macroeconomics like interest rates, inflation and GDP level to determine the overall trend of the economy. After that, the investor will identify the sectors and industries that will benefit from these opportunities. Finally, the investor will select and analyze individual stock or asset within the promising industries before making a decision to invest.
Likewise, multiple time frame analysis also employs a top down approach before entering a trade. Starting with a higher time frame chart, a trader may use the weekly chart to get the big picture and direction of the stock. After that, the trader may use the daily chart to determine the immediate trend of the stock. It may be in a counter trend to the trend in the big picture. Finally, the trader may use the 4 hours or hourly chart for a better entry to minimize risk and increase the probability of a winning trade.
3.What Types of Multiple Time Frames to use
The different set of multiple time frames to use in your charts will depends on the type of traders and the time you can spend to analyze your charts.
The first question you should ask yourself is what is the time frame you are using to enter your trade. This time frame is your Main Frame. You may use the next longer time frame as your Higher Frame and a shorter time frame as your Lower Frame. Below are some examples:
|Higher||Main||Lower||Types of Traders / Investors|
|Monthly||Weekly||Daily||Long Term Investors|
|Weekly||Daily||4 hours||Intra-week / Swing Traders|
|Daily||4 hours||hourly||Intra-day Traders|
4.Chart Setup on POEMS Mercury
You can create multiple time frame charts on POEMS Mercury by clicking the New Empty Chartview. After you have entered the stock, you may change the cycle period to a higher or lower time frame. Repeat the same to open another time frame.
Alternatively, you may prefer to look at 1 big chart and analyze your different time frame by just toggle to a higher frame for the big picture or lower time frame for entry.
5. Example of a trade setup entry
This technique can be used not just for short term traders but long term investors too. Below is an example for long term investors using the monthly, weekly and daily time frames setting for chart analysis.
Higher Frame – Monthly Chart on POEMS Mercury
The chart above shows the monthly candlestick prices of Starbucks (SBUX).
After consolidating for nearly 43 months, it finally broke the resistance at 64.87 at the end of Nov 18. There is a possibility that it would break out this resistance or it could it be a false break out and pullback below the resistance. Following this breakout, you could monitor it using your main frame weekly chart.
Main Frame – Weekly Chart on POEMS Mercury
As seen from the main frame weekly chart, what followed next was 3 weeks of pullback before it closed above the resistance again on the week ending 25 Jan 19. After this pullback, you would be interested to buy and would be looking for a signal to enter. You may zoom in on the lower frame daily chart to look for a price action trade signal.
Lower Frame – Daily Chart on POEMS Mercury
After trading above 64.89 on the week ending 25 Jan, there was a price action trade signal on the daily chart on 6 Feb. It was triggered to enter long on 8 Feb and the uptrend continued after that. This inside bar setup is one of the signal taught in our free online course.
By using this top down approach with the multiple time frames analysis, you will have a better perspectives of the bigger picture and keep yourself out of potential risk ahead. Such risks may include buying below a major resistance or selling above a major support in the higher time frame.
6.POEMS Mercury ChartView Change Cycle Feature
Below is the Change Cycle feature found in POEMS Mercury that you can use in your ChartView to toggle the different time frame for your chart. It can range from a high time frame of quarter to the shortest time frame of 1 min. You can also choose your own setting with the any day or any min option. Also, you can check out our chart setting for price action trading.
A top down technical analysis using different time frame charts can help short term traders and long term investors to have a better perspective of the big picture in a stock or other asset. Consequently, we can increase the chance of a winning trade by identifying the key levels across the different time frames. Furthermore, it helps us to avoid taking high risk with low reward trades by knowing what lies ahead with the higher time frame.
If you have a POEMS trading account, you can trade on POEMS Mercury by downloading the platform.
If you do not have a POEMS trading account with me, you can sign up online. As my client, you can have access to our potential trade setup ideas in our Member’s area.
For more info on POEMS Mercury, watch the video on Getting Started:
One Good Trade