W1/D1/H4 or D1/H4/H1 for trend analysis?

i guess either will work but i would like another opinion for taking entries on M15. i use 60 sma on the three higher time frames similar to three ducks and will only trade when all three are above/below the sma's. entries are based on candle formations at s/r

if i use the D1/H4/H1 sma's then there will be less wait time for them to line up, but also more flip flopping of the H1 sma which could keep me on the sidelines. conversely if i use W1/D1/H4 there will be longer wait times for them to line up but less flip flopping since the lowest sma is H4

this is for 7am to 12pm ish ny time intraday trading. mostly will take entries on M15 but if pa forms on M30 or H1 i will enter there. so maybe i should use the higher sma's then to give more room?

any thoughts?

also am wondering the differences between using all higher time frames for confirmation as opposed to one higher and one lower time frame for confirmation

ie. some methods use a base time frame and an upper and lower time frame for confirmation. whereas others use only higher time frames for confirmation

I work with 3 different trading styles, deals may last from a few minutes (happens very rarely) to several months (also not often), mostly a few hours. All systems I apply on H1, although in some cases can go down to a smaller timeframe to clearly understand situation. And I can rise to more bigger, to evaluate the whole picture. There is no hard limit, but the main remains H1.

thanks for the reply. do you use top down aproach ie W1/D1/H4 for trend analysis for trading on H1 or one above one below ie H4/entry chart(H1)/M15?

I have been wondering whether multiple time frame analysis is actually necessary at all. I have found no definitive proof that it does anything useful. I use it from time to time myself, but I have found that trends on higher time frames do not necessarily correlate to trends on lower time frames. Furthermore, in order for multiple time frames to line up with the same moving averages, there are often many profitable moves missed while "waiting for the stars to align." By the time you see the MA cross in the agreed direction on the lower time frame, half the move is already done...I don't know what your experience is with the method OP, but let me know how it works out for you.

i think the right question is should it be W1/D1/H4 or /H4/D1/W1

3 ducks removes many good trades from the table but also removes indecision about when and which direction to trade. this has taken much of the stress and mental gymnastics away for me, even if at the expense of missing some good trades

what i do differently than 3 ducks is only use the higher time frames for selecting pairs/direction at the beginning of the trade session, then wait for pa at s/r or pa breakouts during the session and use sensible profit targets. so i am relying on all time frame trends to be lined up, and also the volatility of the session and not attempting to catch home runs and hold trades like 3 ducks. sometimes if multiple trades are open i will treat it like a basket and take profit based on equity(combined atr of the pairs usually)

my understanding is that the higher time frame provides the momentum, while the lower time frame direction. so if they are all in sync and i am only trading during a volatile session of no more than a few hours at the same time every day, then i should be able to make modest trades during that session. then on days when they don't line up or are not in sync i can feel safe and stay out

@ericnyamu: care to elabourate?

I trade morning CST and Evening channel trades. I'm working on implementing this strategy for morning trading: http://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2014/05/01/How-to-Day-Trade.html
Not sure if that's allowed or not here, so if the mods delete that link so I will post the strategy now:
The first step in the strategy is to add two moving averages based on the hourly chart.

The indicators that I add are the 8 and 34 period exponential moving averages, based on the hourly chart but plotted on the 5-minute chart (shown below).
These indicators act as a compass for the strategy, helping to see what’s taking place with a longer-term time horizon. If the faster 8 period moving average (based on the hourly chart) is above the slower 34 period moving average (also based on the hourly chart), then the strategy is looking to go long, and to only go long. As long as the hourly 8 period EMA is above the hourly 34 period EMA, only buy positions are entertained.

The hourly moving averages work like a compass, showing traders which direction to trade the trend

Once the trend has been identified, and the bias has been obtained, the trader can then look for entries in the direction of that trend; looking for momentum to continue on the 5-minute chart as it has been displayed by our hourly-moving averages.

And when looking to buy, we ideally want to ‘buy low’ or ‘sell high.’ So, just because the trend is up and we’re looking to buy, it doesn’t mean we want to blindly do so. We still need a ‘trigger’ for the position, and for this, we can incorporate another exponential moving average.

The trigger for this strategy is another 8 period exponential moving average, but this one is built on the shorter-term five-minute chart.

When price crosses the 8-period five-minute EMA in the direction of the trend, the trader can look to buy in anticipation of the ‘bigger-picture’ trend coming back in force.

The ‘trigger’ in the strategy is when price crosses the 8-period five-minute EMA in the direction of the trend

The large benefit behind the strategy is that just by the very act of price moving in the trend-side direction over the shorter-term EMA, traders are buying or selling short-term retracements in the direction of the momentum.

Risk Management

The most attractive part of the strategy is that it allows for traders to ‘buy cheaply’ in anticipation of bullish momentum, or to ‘sell expensively’ in anticipation of bearish momentum.

When prices make those short-term retracements, they create swings in price action. And per price action logic, of up-trends making ‘higher-highs’ and ‘higher-lows,’ traders can look to place the stop for their long position below the previous ‘higher-low’ so that if the up-trend doesn’t continue – the trader can exit the position for a minimal loss.

Stops for long positions go below the prior period’s opposing-side swing

In the case of short positions, traders would want to look to place stops for short positions above the previous ‘lower-high,’ so that if the down-trend does not continue, the short position could be closed in an effort of mitigating the damage as much as possible.


If momentum does continue in the trend-side direction, the trader could be in a very attractive position as prices continue to move in their favor.


Position Management

If the trend does continue, should the trader just sit on their limit order and wait for the sound of the cash register to ‘cha-ching?’

No way. When trading on short-term charts, things can change VERY quickly, and it’s the day-trader’s job to manage that risk.

When the position gets in the money by the amount of the initial stop (a 1-to-1 risk-to-reward ratio), the trader can look to move the stop to break-even (http://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2012/08/24/The_breakeven_stop.html?CMP=SFS-70160000000Nc3MAAS) so that, worst-case scenario should prices and momentum reverse, the trader puts themselves in a position to avoid taking a loss.

At this point, the trader can also begin ‘scaling out’ (http://www.dailyfx.com/forex/education/trading_tips/post_of_the_day/2012/12/31/How_to_Scale_Out_js.html?CMP=SFS-70160000000Nc3MAAS) of the position. Since a 1-to-1 risk-to-reward has been realized, the trader is actively attempting to avoid The Top Trading Mistake; and should momentum continue in the trend-side direction, the trader stands to profit considerably more.

As prices continue in the direction of the trader’s position, additional pieces of the trade can be closed or ‘scaled out’ as prices move in their favor.

The goal is to get the ‘average out’ from the strategy as large as possible, and if momentum is to continue, this strategy can allow the trader to do just that.

After the stop has been moved to break-even, and the initial risk is removed from the position; traders can even look to add-to the trade with new positions or new lots in an attempt to build a larger position with a significantly smaller amount of risk.

--- Written by James Stanley

You might find the book High Probability Trading by Marcel Link interesting, then: a big proportion of the book comprises "definitive proof that it does something useful", and the underlying reasons behind that were what it was written to explain.

The essential point, in so far as it can be summarized in a sentence, is that taking trading signals from the timeframe within which you trade only if they're also confirmed by directional inputs from higher timeframes significantly increases the overall success-rate of the overwhelming majority of methods and systems.

Link was the first to write a popular book about it, but the idea has enthusiastically been taken up by thousands of others since, of course - and for good and understandable reasons.

It's relatively easy to verify it independently, too: all you need to do is collate and compare the outcome information from (say) 100 trades taking higher timeframe information into account with that from 100 trades ignoring it.

One thing's for sure: traders who switch to doing this aren't switching back.

thanks! many of these points are ringing true with me. i have been moving to be at 1:1 and will continue to do so, usually with tp at next sr line after 1:1 which is typically near or at 2:1. since i'm just using micro lots on a small account i won't be able to do scaling yet but i think that will be the next step

after so much system hopping i have found myself going back to some of these key elements in my trading. also, in the trading method lorraine posted i can see there is a jump in resolution between the compass and the entry chart. ie 34 and 8 period ma on the hourly is the compass which is about /4 resolution between ma's. then the entry chart is 5 minute which is /12 resolution from the hourly

it might be down to semantics in regards to my original question, but to know that htf trend analysis is being used by other traders is encouraging

Well the EMA crossing strategy I was using did okay...but seems like you get in too late in the trade. I've been studying Support and Demand levels lately and there that seems to go hand in hand with High Probability trading.
Also, I've followed some bank trade entries too. 153 pips in less than 24 hours with 4 different currency pairs my first day. That is impressive. Testing this for at least a month before going live.

you can do trend analysis on any timeframe, it all comes down to which timeframe you feel comfortable trading. the market is fractal, you have trends within trends within trends, just pick one of the trends that is closest to your Comfort level, and use that trend as guidance, it doesn't have to be the Daily chart, but the higher up you go, the more reliable the trends seem to be, just because they contain more data. if you are a scalper and your goal is to make 10 pips, you should dial down considerably, maybe you could use a 30minutes chart for direction and a 5 minute for trading? it depends on you. there are no wrong way to trade as long as you make Money doing it. and there is no rule about wich timeframes to use for direction. it's all up to you, but the main Point is, there have to be enough gap so you can see both thrends on at least 2 charts, you can use more than 2 charts, some traders use 3 charts.

I share how i trade, may be not good for most of people in FF here. Just mention you some ideas to make-up your own way.
- First off all i wanna see whole picture, so i build yearly chart by spreadsheet file
- Build 2 performance indicators: 1 year and YTD. So i use MT4 for write my code. These indicators are showed me where the market goes. I just focused on price movement, don't care time frames. 1year line is the trend and YTD is confirmation. If both of them are matched my criteria, i go to next step.
- Time to get in: go down TF D1, now i use "candlestick patterns" to pick the good time for jumped in.
- Risk Management: 1 cent (100pips) of currency moves = how much my money moves.
- Take Profit: Until the trend is ended.

no, I don't

thanks for the responses everyone; i need to subscribe to my own threads more often ; )

i'm also sometimes going with flags, wedges etc and trading the majors as a basket and use the combined atr of the pairs being traded for my sl/tp/ts. i use an equity ea but will probably get one coded at mql5 that can trail equity by total pips, also with the ability to trail from equity pip stop loss and not just from profit

in terms of filtering trade opportunities i am taking the following steps:

first filter: trading only between 7am est and 12pm est, often will be finished by 9-10am
second filter: only trade 6 majors (eu,au,nu,uf,uc,uj). i found gu to be too unpredictable and often goes one way when the other pairs go another
third filter: out of these 6 pairs i only will trade those that are either above or below 60 sma on 5 time frames(m,w,d,h4,h1); with some wiggle room if say the h1 is not in sync with the higher time frames

i find myself torn between this basket style which i also trade into news events, and the single pair sniper style which i don't trade near news events and use hard stops/tps. the basket style is definitely more fun and easier but the single pair style is maybe safer

btw: today none of the pairs were in sync so i stayed away, although they all were showing very strong trendline break formations which would have given a decent profit at 1:1 or b/e in any case. then they continued back in the direction out of my trading spec. yesterday though was a good day where the pairs that were in sync moved nicely for a good basket trade of at least 2:1. so on days like this i don't feel bad about missing the boat

I would say 3 TF's are a lil anal and you can get by with 2. But using an indicator on the higher TF, like you're seeing, is only going to slow you down when you try to pinpoint a move that's already happened. so just use some sort of P.A. to determine direction on higher time frame and pinpoint entry with an indicator if you so choose to do, on lower TF.

thanks hazel. what i am doing is only using higher time frames to select pairs/direction at the beginning of the trade session. i don't want to be looking for moves on higher time frames i just want to know which pairs have the strongest momentum. i only have the sma's on the higher time frames but not on my entry chart (m15). i use time frame change scripts and hotkeys so i can in a few seconds flip across all time frames before i begin trading and know which pairs i will be looking at for the day

then i just place pending orders outside the pa formations or recent high/lows and anticipate movement of the basket. sometimes though i flip to say h1 or h4 and there is conflicting pa and then i am more hesitant, but mostly i just want to pick pairs and set orders and manage by equity

back to the original question though, it is often that m,w,d etc will line up, but what i wanted to know is what is more relevant to entries on m15, all the highest time frames lining up or just the ones above m15 lining up?

here is todays trading. i chose au,nu,uf,uj and placed pendings and waited for the news. i got a bit antsy and set to break even when 30+ pips was reached (combined atr of those pairs) and got stopped out at break even. now the basket is taking off : / (edit:went further to profit, maybe 2:1, now retracing)

btw in the top left of each chart is a blue text label like "bbbbs" which i modify at the beginning of the session to tell me where each time frame's price is according to the 60 sma. i could get an indicator written for this but it will be changing on its own and would keep drawing my attention. it is just there to set and forget at the beginning of the session and not draw my eye to it, rather it just reminds me what pairs i have selected to trade for the day and their direction

today i chose au,nu,uf,uc,uj and set collective sl and tp to about 40 pips at 1:1. was considering adding eu because of such a strong trend line break formation but decided not too (d'oh). waited for news and tried to keep the pending orders not too close and closed the basket manually (d'oh) at 31.6 pips; i need to work on letting tp be reached. btw the loss on monday was because i was still experimenting and did not move to break even when the basket reached 1:1

if this turns into a journal i might start a proper thread in the journals section

forex is simple, I only trade D1 and H1 pins etc. major pairs including NASDAQ and Gold. Wait for the pin on D1(support and resistant)(supply and demand), then switch to the H1 timeframe, find pins(support and resistance)(supply and demand).
its working for me.

price action is king for the past 200 years till today, forget about indicators