Multi Time Frame Trading Mistakes:
When we start out multi time frame trading, it can be a bit overwhelming. You are trying to consolidate 2 or more time frames down into one actionable trade. Including a stop loss, entry signal, and risk parameters. In this video, we go over the top 5 mistakes that traders make when they are doing multi time frame confluence trading. These are the mistakes that can sink your account, actually make you MORE indecisive, and stop your trading altogether.
Common Mistakes:
Multi Time Frame Trading Mistake 1: Too Many Time Frames
This is the pitfall that you see many traders fall into. You’ll see it when they have 4+ charts open for one single trade, and every time frame that exists they are analyzing! Having a bigger view of the market is important, but you need to condense the time frames you trade into ones that are relevant. Too many different time frames and you will see many different contradicting signals.
Multi Time Frame Trading Mistake 2: Non relevant time frames for confluence
When you are trading the daily charts, you do not want to be looking at 5 minute charts for confluence in your trading. While they are still the same market, and you can pay attention to the market as a whole, you want a set of time frames that are directly relevant to each other. This means that you want time frames that are closer to one another. Similarly if you are trading the 5 minute charts, don’t look for a 10 minute chart as a broader view on the market. You want to go higher up in time frames to look for different levels of support and resistance.
Multi Time Frame Trading Mistake 3: Analysis Paralysis
This happens when you are looking at multiple time frame confluence, but do not have a set of rules to trade. You need a set rule such as look for trades on the hourly chart with entries on the 15 minute. Similarly looking for trades on a 15 minute chart while minding support and resistance on the hourly charts. Do not fall into the trading trap of trying to find the perfect setup in all time frames. Between all of the time frames you trade, there will always be conflicting signals.
Multi Time Frame Trading Mistake 4: Not using the broader view of the market
Many traders focus on direct time frame confluence. That is when the two time frames they are trading are close together. They fail to use a broader view of the market, such as the yearly outlook, to have extremely important S&R levels outlined.
Multi Time Frame Trading Mistake 5: Not using all available tools
Multi time frame analysis is meant to improve the trades you are already making. It is not a complete trading strategy. Use it as one, of many, tools that improve every trade you take.
Bruce Banks