India Markets

Higher Time Frames, Higher Probability

BrandonWendell
Brandon Wendell
Instructor, CMT

It is all too easy to get tunnel vision when it comes to trading. Often when a person trades, they will focus so much on the time frame on which they are identifying their trades that they fail to acknowledge the dangers that can affect their trade from a larger time frame.

When looking to make a trade, a trader should always consult the larger time frame to make sure that they are trading with the dominant trend and not approaching a major supply or demand zone.  If price is nearing a larger time frame supply zone, then taking trades on the long side has increased risk.

The same is true when approaching a demand zone from the larger time frame.  Look at how the shorting opportunities become less profitable.

When a trader is deciding to take certain trades or is searching the markets to find trading opportunities, they are best to look for those opportunities that offer low risk with high probability.  Think of price as a person walking through a room. If there is a chair in the way, they could easily push the chair out of their way and pass through.  That chair is similar to the supply or demand from the smaller time frames.  Price will break those levels when in the impulsive phase of the trend.

However, the supply or demand of the larger time frame is like the walls of the room.  A person cannot easily break through the wall (if they can at all), just as impulses in a trend will tend to halt at the supply or demand from a larger time frame.

The phenomenon I am describing is called the curve.  Learn how to identify and use the curve for increasing your odds for success in the markets.  Join Online Trading Academy’s Professional Trader course or Extended Learning Track to discover the power of multiple time frame analysis for your trading.

Disclaimer
This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.