Spark Global Limited Reports:
It’s easy to get tunnel vision by staring at a 1-minute intraday chart.
While you may have a good sense of where a particular stock is going in the next few weeks, you can quickly lose sight of the big picture.
Using multiple time frames in technical trading can indeed help traders understand the big picture and confirm price movements, but it needs to be used correctly in the right context.
Some traders in losing positions tend to use it to justify not exiting the trade. Maybe they traded on a 1-minute chart, hoping to make a few cents a share.
But the next thing you know, the position isn’t working for them, and they’re drawing lines on weekly charts and reading SeekingAlpha articles to try to justify sticking with their positions until they turn a profit.
Needless to say, this is not the way to use multiple time frames.
So how do you use multiple time frames in swing trades?
Timed entrances and exits
The most common type of trader using multiple time frames is three-time-frames: trading time frame decisions and levels for their underlying trades, entry/exit times to reduce your trading costs through execution opportunity areas, and your large photo time to give you a market drift.
For simplicity, let’s look at an example from the SPY ETF. We will use the daily chart as our trading time frame, the weekly chart as our macro time frame, and the 15-minute chart as our entry/exit time frame.
article links：How to trade volatility using multiple time frames
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