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Question on Lower Time Frame Indicators Vs. Longer Time Frame

  • #1
  • First Post: Apr 26, 2007 9:23am Apr 26, 2007 9:23am
If you are working off of a 4 hour chart, and the lower time frame indicators are saying short, however the longer time frame indicators are saying long, what position do you take? Or, would it be best to just stay on the sidelines till you get a clear cut direction overall?

Any thoughts, would be much appreciated.


Regards,

Marc
  • #2
  • Apr 26, 2007 10:16am Apr 26, 2007 10:16am
Quoting marcf
If you are working off of a 4 hour chart, and the lower time frame indicators are saying short, however the longer time frame indicators are saying long, what position do you take? Or, would it be best to just stay on the sidelines till you get a clear cut direction overall?

Any thoughts, would be much appreciated.


Regards,

Marc

I would say that you follow the H4 and use the smaller TF to show the best entry. If the H4 says go long, then look to the smaller TFs to agree. At some point the smaller TFs will show a reversal in favor of the H4 long if that is what's going to happen.
  • #3
  • Apr 26, 2007 10:42am Apr 26, 2007 10:42am
Thanks for your input...

Quoting KudzuFX
I would say that you follow the H4 and use the smaller TF to show the best entry. If the H4 says go long, then look to the smaller TFs to agree. At some point the smaller TFs will show a reversal in favor of the H4 long if that is what's going to happen.
  • #4
  • Apr 26, 2007 10:44am Apr 26, 2007 10:44am
Quoting marcf
If you are working off of a 4 hour chart, and the lower time frame indicators are saying short, however the longer time frame indicators are saying long, what position do you take? Or, would it be best to just stay on the sidelines till you get a clear cut direction overall?

Any thoughts, would be much appreciated.


Regards,

Marc
The shorter term time frame is used to give entry and exit signals, while the longer term confirms which direction the trend is going. So if the 4H chart shows an up trend, only use long entries and short exits on the 1H. If the 4H chart shows a down trend, only use short entries and long exits.

If the 4H chart's trend can't be determined, or looks like it is in transition, sometimes it is best just to go look for another currency pair to trade. If you feel like you MUST trade it, use about half the position size you normally would to reduce risk, as that pair is in an uncertain time and there is a greater chance for a loss. You can always double your position to what you would normally trade when a clear trend shows up.
  • #5
  • Apr 26, 2007 1:04pm Apr 26, 2007 1:04pm
As it has been pointed out already, most of the trading methodologies around use the longer time frame to establish the overall direction of the trade, and zooming into the shorter time frames for an entry once the pre-set requirements are met. Also as it has been pointed out before, most of the people trigger their entry when the shorter time frame turns around (meaning that the retracement is over) and agrees with the longer time frame.

Triggering off indicators in the shorter time frame might be alright (even though I am very anti-indicators). However, I would not use indicators on the longer time frame chart for the purpose of determining the overall market trend. That's what Moving Averages, trendlines and price patterns are for.
  • #6
  • Apr 26, 2007 8:02pm Apr 26, 2007 8:02pm
Great answers here on the use of lower frame and higher time frames together. I suggest that unless your tested system clearly uses these multiple time frames you watch yourself closely.

First off, you need to have a clear understanding of what time frame you are trading and Stick to it. If you use the 4 hr time frame and it is saying to go long, then you go long, whether u use the lower frames or not.

Personally, i don't use multiple time frames very much now. They just seem to confuse me, and while they can get you in a trade at a better trade, they can also get you in a trade TOO EARLY, because you are now trading a lower time frame. I honestly have found that simplicity is a key. Not just with a clear system, strict MM, but also knowing what Pair you are trading and what time frame.

Good trading,

Jim No
  • #7
  • Apr 27, 2007 9:31am Apr 27, 2007 9:31am
Triggering off indicators in the shorter time frame might be alright (even though I am very anti-indicators). However, I would not use indicators on the longer time frame chart for the purpose of determining the overall market trend. That's what Moving Averages, trendlines and price patterns are for.[/quote]

Why ... I have never been able to understand this thinking
MA are just indicators?
A good indicator will smooth out the MA & give you a better sign.
the tool has to be simple
ie the Stoch or the RSI - I would say at likely the best.
because they are the simplest & fastest to responded

ie. a 3/5 stoch is faster & better then a 20 sma
It will give you the infor on trend 4 times faster
right?
& is way better then a 5 sma because it is reading the diff. in price
not the price

Just my thoughts

TEB
  • #8
  • Last Post: Apr 27, 2007 2:25pm Apr 27, 2007 2:25pm
Mostly I agree with the above assumptions. It depends how you trade though. If I saw all the short term indicators lined up off a S/R for a small dip I personally might take the trade even if it was against the 4h. Ofcourse if it didn't do what I expected in 5-10min I would bail out with a small lose or gain. Sometimes it will move after you get out, but I would rather miss out on a few pips then lose them. It's risky enough trading against the trend no point adding more risk. My exit would likely be on the 5 or 15 min chart or S/R (median), depending on the move. But then I'm more of a short term trader, I like making my pips in 30min-2hr.
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