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Using multiple time frames and getting different signals

  • Post #1
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  • First Post: Feb 1, 2016 4:51am Feb 1, 2016 4:51am
Using multiple time frames and getting different signals...

So Im getting a bit frustrated with my trading.

Using mutiple time frames is supposed to help with seeing the bigger/smaller picture but what it does for me is often give me conflicting signals in my trading.
I may have a sell on the 5 min but a buy on the 15 and a wait and see on the hourly.
Example; this morning ...

As the dax opened the 2 min was showing a breakout to the downside but then looked like it was going to reverse. The 5 min at first showed breakout to the downside but then put a hammer down and again looked like it was going to head back up.
The 15 min looked like the trendline was holding so showed reverseal is coming the hourly wasnt done printing.

This is just an example so dont get hung up on the particulars but I just wanted to show this.

What I end up doing is giving each time frame credence and trading accordingly but then my trading gets confused when I dont know which way its heading but I dont want to miss out so I keep trying to 'guess' ahead of the move - what happens is I get wipsawed and I miss what I originally thought was the right trade.

So this trade I Sold; then bought because thought we were heading up but then resold but got stopped out. Now out of the market and see that the dax continued down as I originally thought.

So how do you look at mutiple time frames without getting 'confused'?

Often it looks like the signal points one way on one time frame but another with the other time frame.

I tend not to use squiggelies on my charts but look at trendlines and support and resistance.

Suggestions?
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Pick a time frame that defines your trend and you follow it. The higher the time frame the more pips it gives or could make you lose and that choice is up to you. Then the lower time frames are for your pin point entries. On your chart, the hourly is bearish and so is everything else. So you start picking your entries on the downside initially with the 5mins. IF it is ranging, then you can refer to the next time frame and so forth.

On trend change, Let say the 5 mins shows a trend change, so you check the 15mins if that change is contained in that time frame, if yes then continue trading in same direction, if not, move to the next to higher time frame which is now the HOURLY. Since the hourly is your main trend, if it now points upward, you wear bull costume. Rinse and repeat.

You might want to check the Dow Theory about trends.
Quoting djxput
So how do you look at mutiple time frames without getting 'confused'?
Multiple TF trading can be confusing at first but I think this is mainly because a lot of retail books etc espouse phrases like, "Never take a contra-trend trade" without really setting out or defining what the terms means. My view is that if one takes the trade in the timeframe that it sets up the phrase "Never take a contra-trend trade" will eventually cease to have any meaning. A key factor in multi-timeframe trading is to know when to get out. Usually (but not always) the clue to this lies on a higher timeframe. A real world example from last Friday:

GBPJPY M15

There were some clear sell signals coming into the market on this timeframe and quite a few pips could me made on the short if one timed the top entry correctly. I was actually looking to sell a retrace but to be honest the retrace took until Friday close and for me there was no point to continue trading. The key on this is the retrace (where the white tick is). I didn't buy on this occasion but there were lower TF opportunities, which of course the books would be screaming "Contra-trend! Contra-trend!"

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GBPJPY M1

Switching to an M1 chart, (the white tick remains exactly where MT4 printed it), I've scrolled to the right a bit to remove the big liquid move down. The market started to make higher highs and for me regardless of the fact that this is an M1 chart, this TF can now be treated as a fresh "up" trend, buying the pullbacks in accordance with one's signals/method. The obvious caveat is the upper blue box, which is the origin of Friday's move down and a very high probability area where the current M1 bullish trend will end. Evidently we don't "know" the M1 trend will end at the blue box, however, the blue box (which is not fully shown on this chart/magnification) makes an excellent target for any M1 longs.

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Multi-timframe trading is about perspective more than anything and although at first it can be quite hard to wrap one's head around I think it can be a very rewarding way of trading the market. Moreover it provides an opportunity to trade less pairs, which for me is very important. Good luck.
  • Post #4
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  • Edited 8:00am Feb 1, 2016 7:37am | Edited 8:00am
Quoting djxput
Using multiple time frames and getting different signals... So Im getting a bit frustrated with my trading.... Suggestions? {image}
Hi dixput,

I haven't got time right now to provide anything but a brief response to your question, but yours is the classic dilemma for someone using a multiple time frame system. I wonder how long you've been using multiple time frames?

Be careful, because until you understand how the time frames you are using compliment each other, you will just be getting lots of conflicting signals. I have traded using a MTF system for years, and I do it using moving averages, and they have to work together to produce one picture, not several. For example, you may be using a 50, 100,200 MA system - you might have the 50 on the smallest chart above the price giving you a sell signal, but the same MA on a bigger chart beneath the price giving you a buy signal - so what do you do? It depends on where the other MAs are on the other time frames? Do you get my logic?

It took me many thousands of hours to work it all out, a bit like a complex puzzle, but it can be done to produce a very effective trading system. Good luck.

ps, you're welcome to re-post your post onto my thread ' The Trader's Academy - by traders for traders ', as there are some good traders on this thread and you may get some decent feedback.
  • Post #5
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  • Edited 1:13pm Feb 1, 2016 1:01pm | Edited 1:13pm
Quoting cat
{quote} Hi dixput, I haven't got time right now to provide anything but a brief response to your question, but yours is the classic dilemma for someone using a multiple time frame system. I wonder how long you've been using multiple time frames? Be careful, because until you understand how the time frames you are using compliment each other, you will just be getting lots of conflicting signals. I have traded using a MTF system for years, and I do it using moving averages, and they have to work together to produce one picture, not several. For example,...
Thats what it feels like Cat ... a puzzle - and even thou Ive spent many hours looking at it - I still get baffeled. I dont have a particular time frame I look at - I like to look for chart patterns and they show up on all time frames; but often they conflict each other. A reverse H&S on the hourly; and then you may have a normal h&s on the 3 min... or what looks like one; what ends up happening is either the pattern ends early; or the pattern rightly fails or yes we get a reversal and this leads into the hourly reversal (This is just an example).

Perhaps my issue is I dont stick with one main time frame - From my understanding it is suggested say you trade the 5 min; you use the 1 min for entry and the 15 or hourly for trend determination. ~ What I do is stare at mutiple time frames and decide what I like the best in one and then trade that but then obviously as time goes on other times frames show start displaying other meaninful 'suggestions'.

I like to look for reversals or counter trend trades; and I like to get in as early as possible. Why I often scour the smaller time frames for breakouts ... but what happens more then not is these breakouts are false and just end up being waves in the larger pattern. Take last weeks action with the dow and oil.

I may just do that also post in your thread - to be honest its an issue Ive struggeled with at least for the past year.


Quoting simond2002
{quote} Multiple TF trading can be confusing at first but I think this is mainly because a lot of retail books etc espouse phrases like, "Never take a contra-trend trade" without really setting out or defining what the terms means. My view is that if one takes the trade in the timeframe that it sets up the phrase "Never take a contra-trend trade" will eventually cease to have any meaning. A key factor in multi-timeframe trading is to know when to get out. Usually (but not always) the clue to this lies on a higher timeframe. A real world example...
Trying to understand what you said there Simon. So According to the 1 min chart with your pics - shows a up move and a good entry. (say near the check) - the 15 min clearly shows a reversal happened ie a downtrend. So at the same point on the 15 min still look like a down trend; although a slight pullback may occure.

So trading the 1 min if one didnt know about the 15 min chart; one may be so inclined to keep in the trade near the top but the 15 min shows resistance ... (is this what you were saying?)

So 15 min down but 1 min up ... so assuming you traded the 1 min; you can use the 15 min to help with the exit (because of the 15 min resistance) and if you are bold then short it again (but like you said its friday so ...)

What do you do if say it wasnt friday but midday thurs and the charts looked like they did ... But the one min showed even more bias for an upmove (lets say you were still in the position) - but then looking at the 15 min chart it looked as it still does.?

- thanks guys for the input -
Quoting djxput
{quote} Thats what it feels like Cat ... a puzzle - I like to look for reversals or counter trend trades; and I like to get in as early as possible. -
Why? Waiting for pull backs and going in with the trend is the easiest way to make money, yet you are doing the opposite - trying to pick tops and bottoms is the graveyard for traders. Counter trend trades can be profitable, but you have to have a system which tells you when it is likely to be safe, and when it is not.
Quoting cat
{quote} Why? Waiting for pull backs and going in with the trend is the easiest way to make money, yet you are doing the opposite - trying to pick tops and bottoms is the graveyard for traders. Counter trend trades can be profitable, but you have to have a system which tells you when it is likely to be safe, and when it is not.
Care to expound upon that?
Quoting dforant1
{quote} Care to expound upon that?
Sorry, on which part?
Quoting cat
{quote} Sorry, on which part?
I traded reversals for years. Minimally successful till year ago started trading pullback/continuations 8am est., NY London market GU, M15 for 4 hours daily. Been successful since. I keep a multi meter period indicator handy and a no lag dot system for trend. Taking up to 3 trades per trend period. Usually get 1-2 per trend.
Quoting dforant1
{quote} I traded reversals for years. Minimally successful till year ago started trading pullback/continuations 8am est., NY London market GU, M15 for 4 hours daily. Been successful since. I keep a multi meter period indicator handy and a no lag dot system for trend. Taking up to 3 trades per trend period. Usually get 1-2 per trend.
I have absolutely no idea what that is. Well done, and good luck.
Please see post below
Quoting djxput
Trying to understand what you said there Simon. So According to the 1 min chart with your pics - shows a up move and a good entry. (say near the check) - the 15 min clearly shows a reversal happened ie a downtrend. So at the same point on the 15 min still look like a down trend; although a slight pullback may occure.
Yes, more or less, but the check on the chart is just to illustrate the bottom of the M15 move down - it's not the entry point on a M1 chart. I'd only be interested to start buying on M1 once price has broken the yellow line, i.e. it's making HHs and HLs (remember we're talking about multi-timeframe analaysis, and what looks like a straight run up one timeframe will look like classic "trending"price-action on another).

Quoting djxput
So trading the 1 min if one didnt know about the 15 min chart; one may be so inclined to keep in the trade near the top but the 15 min shows resistance ... (is this what you were saying?)
Yes.

Quoting djxput
So 15 min down but 1 min up ... so assuming you traded the 1 min; you can use the 15 min to help with the exit (because of the 15 min resistance)
Yes.

Quoting djxput
and if you are bold then short it again
Absolutely not. Boldness has nothing to do with it. Once price hit the M15 level, I would switch to a M15 chart and wait for a M15 signal to short (remember, we're talking about multi-timeframe analysis). If the market gave me the M15 signal to short - I'd short it. If the market didn't give me the M15 signal to short, I wouldn't short it, I would wait for another setup.

Quoting djxput
What do you do if say it wasnt friday but midday thurs and the charts looked like they did ... But the one min showed even more bias for an upmove (lets say you were still in the position) - but then looking at the 15 min chart it looked as it still does.?
It depends on how many positions I had long on the M1. What I can tell you without a shadow of a doubt, however, is that one of those positions would be liquidated at the M15 resistance. The rest (if I had them on) would be trailed behind the market.
Quoting simond2002
{quote} Once price hit the M15 level, I would switch to a M15 chart and wait for a M15 signal to short (remember, we're talking about multi-timeframe analysis). If the market gave me the M15 signal to short - I'd short it. If the market didn't give me the M15 signal to short, I wouldn't short it, I would wait for another setup. {quote} It depends on how many positions I had long on the M1. What I can tell you without a shadow of a doubt, however, is that one of those positions would be liquidated at the M15 resistance. The rest (if I had them on)...
So with your example; you would only re-short (if say you were out) on the 15 min if you got a clear signal to short ... on the 15 min - you wouldnt say try to jump the gun and look at the 1 min and go oh look its looking bearish so Ill jump in and hope it pulls the 15 min along with it?
- to put it in other terms - lets say the 15 min candle wasnt even done printing and at the moment it looked neutral.
Quoting cat
{quote} Why? Waiting for pull backs and going in with the trend is the easiest way to make money, yet you are doing the opposite - trying to pick tops and bottoms is the graveyard for traders. Counter trend trades can be profitable, but you have to have a system which tells you when it is likely to be safe, and when it is not.
hmmm perhaps this is why Ive struggled. I do try to pick the tops and bottoms and ya find it often futile; sure I do end up getting it right eventually and make some decent change but in the mean time I get my account tore up.

Perhaps I need to be more patient and do as you suggested; wait for the pullback or better confirmation then enter.
Don't worry too much about getting exact tops and bottoms, the trend usually takes a while to turn over. The big trades will occur when the market is starting to get on the move in the new direction and excitement about the new trend is picking up.

Multiple-timeframe trading is over hyped. If you have a 12 period SMA on a 5m chart, you are essentially looking at the 5m and the hourly. If you add a long moving average to your chart, that is as good as having two timeframes.
"Don't fear a bubble until it starts to burst."
Let me explain exactly what I mean by "The big trades will occur when the market is starting to get on the move in the new direction and excitement about the new trend is picking up."

You need the 5m to be trading above the 25 to 50 SMA's + EMA's and etc to get the serious ramps which roll in the pips. People don't get excited about cheap under-average prices, but prices can bounce back violently from severe crashes.

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"Don't fear a bubble until it starts to burst."
Quoting djxput
{quote} So with your example; you would only re-short (if say you were out) on the 15 min if you got a clear signal to short ... on the 15 min - you wouldnt say try to jump the gun and look at the 1 min and go oh look its looking bearish so Ill jump in and hope it pulls the 15 min along with it? - to put it in other terms - lets say the 15 min candle wasnt even done printing and at the moment it looked neutral.
That's how I would trade it, yes. Once price hits a M15 level, I want to see M15 PA before taking the trade.
Quoting simond2002
{quote} That's how I would trade it, yes. Once price hits a M15 level, I want to see M15 PA before taking the trade.
thanks - helps to get someone else opinion. Get stuck in your own head ... especially with something like trading.
  • Post #19
  • Quote
  • Edited 11:22pm Feb 27, 2016 10:29pm | Edited 11:22pm
Quoting djxput
Using multiple time frames and getting different signals... So Im getting a bit frustrated with my trading. Using mutiple time frames is supposed to help with seeing the bigger/smaller picture but what it does for me is often give me conflicting signals in my trading. I may have a sell on the 5 min but a buy on the 15 and a wait and see on the hourly. Example; this morning ... As the dax opened the 2 min was showing a breakout to the downside but then looked like it was going to reverse. The 5 min at first showed breakout to the downside but then...
Hi djxput

I love trading multiple time-frames using my trend following discretionary systems. It really helps to put a context around current market conditions. As opposed to say trading a single timeframe and possibly scaling into a trend by pyramiding, I use multiple time-frames to achieve a similar thing with a lot of added benefits. Firstly, trends first emanate at the lowest timeframe and subsequently emerge onto higher time-frames so if you can scale into a trend on say the M30 timeframe, and it persists, then when you have reached >= break-even (worst case scenario) on that timeframe, you can then have a look at the next timeframe up and consider whether a trade is also valid on that timeframe.

A key difference to standard pyramiding on a single timeframe is that your trade variables are configured for each timeframe and reflect volatility of that timeframe. This means that while some time-frames may fail, other time-frames might succeed. With traditional pyramiding, when one trade fails or your exit point is reach, it is game over for that move and you need to start again.

For example, take the screenshot below of Gold on 6 time-frames from MN (top left) to M30 (bottom right).
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When determining the market context, start from top down. For example, on the MN and W1 time-frames we can clearly see that we have been enjoying a bear market since 2011. This is where the fundamentals are playing out in driving the secular trend and where other market participants such as investors and risk managers are closely looking at. IMO it is the economic drivers at these time-frames that is generating the bias for trends of significance on the lower time-frames.

For Gold we are at a pretty pivotal moment right now as there are signs that we may be entering a market change. Of course, we may just have tested the extremes and shortly could be reverting back into primary trend. Either way, it is an interesting point of time for either a possible beginning of a decent bull phase or an excellent entry for a resumption of the bear phase.

Look where price is currently and how it is testing the standard deviation channel. You can see that on D1 and H4 we are in counter-trend mode (to the primary trend on MN and W1) but these may be infant signs of a more enduring bullish trend for gold.

I have already had a few good stabs at some counter-trend trends on M30 and H1 over the past month or so but right now, the market is consolidating. When put in context, you can possibly understand why as we are now at a critical juncture where there is obviously market uncertainty about whether the bulls or bears will win the battle.

Below is a screen shot of recent gold trades and if you look at the Counter column, those with a tick are counter-trend trades. Since December 2015, counter-trend opportunities on the short term time-frames have been presenting themselves and some have been quite profitable.

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Unrealised valuation on open gold trades currently on D1 and H4 (both in counter-trend) are as follows.
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Trend or counter-trend trades is not a problem provided there is justification for it and that you do not overexpose your equity risk. Normally counter-trend trades have a short lifespan so you need to consider this in your strategy development for these type of trades. Obviously the aim is to get on board the primary trend, but you do need to sacrifice some profits when the trend ends to play this game. A counter-trend strategy therefore is a nice addition to the arsenal.

You will note on the Gold charts that H4 is deep in profit and worst case scenario will still be profitable. On D1 however we still need more upside before this timeframe is profitable in it's own right. You therefore do not enter other time-frames until this is achieved. If this occurs, I then have the M30, H1, W1 or MN to choose from. It will be a long time before W1 or MN reach critical trending condition so my focus at the moment is on M30 and H1 as potential future candidates for entry.

Of course, the short trend may resume which will be indicated first on M30 then H1 then H4 etc.....but you probably can now see how context helps. If we revert back into short primary trend then the M30, H1 ,H4 etc will stagger entry into this trend at excellent entry points.

The aim of the exercise is that in periods of good trending conditions you find that over time you are firing on all cylinders with trades on all time-frames yet have not overly exposed yourself to risks of correlation in getting their. When this happens as it infrequently does, you mop up all of the available trend following alpha on these different time-frames and can get some cracker results to store away for the rainy days that is inevitable with trend following.

regards

C
  • Post #20
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  • Last Post: Feb 27, 2016 11:15pm Feb 27, 2016 11:15pm
Some traders used multiple time frames for entries on a trade. I would suggest to practice more.
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