Multi-Time Analysis – How to use it in your Day Trading
Multi-time analysis is one of the most important concepts you need to know especially if you are just starting your trading journey. Why? It can make or break your trading career.
In multi-time analysis, there are two things that are involved.
The concept of the market hours that are good for you to trade
If you are a stocks trader, then, you are only able to trade stocks when the market is open. For example, if you trade UK-based stocks, you are only able to trade during the day, London time.
Similarly, if you have specialized on US-based stocks, you will be able to trade during the US trading session. In all this, most of the actions usually happens shortly after the market has been open and shortly before the market is closed.
If on the other hand you are a currencies trader, you are free to trade at any time during the weekday. This is because the markets are usually open 24 hours every day, Monday to Friday.
However, the activity of different currency pairs is usually concentrated in certain hours. For example, in the Asian session, there is usually no much activity. As the Asian session intersects with the European session, activity tends to increase. The activity then increase in the American session when Wall Street enters the market.
It is possible to view the different timeframes of an asset
For example, a chart could be gaining in a daily chart but be in a sharp decline during the hourly chart. Similarly, it could be moving in a ranging pattern in a hourly chart but in a sharp downward trend in a 5-minute chart. Therefore, how do you conduct this type of analysis?
First, you need to determine the type of trader that you are. If you are a long-term trader, it is irrelevant to look at a five-minute chart. This is because using your style, you are not focused on what the price will do in the next five or ten minutes.
Instead, you are focused on what will happen in the next few weeks or months.
Similarly, if you are a short-term trader focusing on a few minutes, your goal is to profit with the short-term fluctuations of the price. Therefore, it does not make sense to conduct your analysis using daily, weekly, or monthly charts.
If you are a swing trader too, it will not make sense to use weekly and monthly charts.
Therefore, to conduct proper multi-time analysis, it is very important that you first determine the type of trader that you are. This will help you avoid making the mistake of analyzing short-term trades using monthly charts.
Determining the type of trader you are is important because it will also help you know how to conduct technical analysis. For example, if you are scalper, who focuses on very short-term trades, you will not use a 100-day moving average. Instead, you will use a very short-term moving average, which will help you make better trading decisions.
→ How to master technical analysis