Price charts exist on many different scales (weekly, daily, 4-hour, 1-minute, etc). Experienced traders will know the importance of considering a variety of timeframes simultaneously when making trading decisions.
The purpose of this guide is to explain how to generate charts of different timeframes and to outline how to implement trading strategies using multiple timescales.
Generate price charts of various timeframes using the BTSE trading platform.
Identify synchronous trends across multiple time frames.
Use timeframe filters to time entries and exits
Decide what timeframes to use for different strategies
How to Generate Charts Over Multiple Timeframes
Step 1: Find a chart on the BTSE platform
Step 2: Select the chart timeframe
Step 3: Choose a different timeframe
Step 4: Marvel at your newfound ability to switch timeframes
How to Trade Synchronously Across Multiple Timeframes
Now that we know how to switch time frames, we can now begin adding multiple dimensions to our trading approach.
A common way to trade synchronously across multiple timeframes is to treat each timeframe as a filter. If a particular trade looks good across at least 3 consecutive timeframes, only then do we have the green light to trade. A trade that ‘looks good’ will depend entirely on your trading strategy.
Let’s take a look at a simple trend-following strategy below:
The hypothetical strategy could be to enter a long position if the price is above the 200 period moving average across three different timeframes. For more information on trading with moving averages, please see Beginner’s Guide to Moving Averages.
Note: The 200 period moving average will adapt to the particular timeframe of the chart. For example, on the daily chart, it will show the 200-day moving average. However, on the 1-hour chart, it will display a 200-hour moving average.
Let’s now work through the different timeframe filters one by one:
Filter 1: Bitcoin price on the daily chart is greater than the 200 period moving average
Filter 2: Bitcoin price on the 4-hour chart is greater than 200 period moving average
Filter 3: Bitcoin price one the 15-minute chart is greater than the 200 period moving average
In this particular case, we can enter the trade because our trading strategy indicated a buy signal across all three timeframes.
Pro tip: Start filtering trades from the longer time frames first
Using Multiple Timeframes for Timing Entries and Exits
Situations may arise where a given strategy indicates a buy signal on the daily and 4-hour charts but not on the 15-minute chart. In such cases, traders can simply monitor the 15-minute chart and time the trade accordingly.
Conversely, a situation can also arise where a given strategy indicates a sell signal on the 15-minute and 4-hour charts, but not on the daily chart. In such cases, traders might monitor the daily chart and time the exit of the trade accordingly.
What Timeframes to Use For Different Strategies
Most trading strategies can be differentiated on the basis of how frequently trades are entered.
Shorter-term strategies that enter and exit positions on a daily basis might use the 1-hour, 15-minute and 1-minute charts as the three timeframe filters. Longer-term strategies might use the weekly, daily and 4-hour timeframes as appropriate filters.
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