LogoMy Trade Playbook

Navigating the Waves: Understanding Trading Trends Across Time Frames

Fundamentals
Cover Image for Navigating the Waves: Understanding Trading Trends Across Time Frames
Sorakthun Ly

If you're reading this, you're probably like me: a trader who's always eager to understand the nuances of the market. Today, I'd like to share some insights I've gathered about understanding trading trends across different time frames. If you're a beginner, this will be a great starting point, and even if you're an experienced trader, I believe you might find some useful tidbits.

In my journey as a trader, I've learned the importance of keeping an eye on different time frames when assessing trends. Not just that, I've realized the significance of knowing which chart I'm trading on. This might sound rudimentary, but it's the foundation upon which successful trading strategies are built.

The Basics: Short, Medium, and Long Term Trends

But first, let's get a grasp on what we mean by short, medium, and long term trends. In trading terms, the long term generally refers to anything more than 4 hours. The medium term is typically between 15 minutes to 2 hours, and the short term ranges from 1 minute to 5 minutes. Remember, these aren't hard and fast rules, but approximations that can guide your trading decisions.

Why Multiple Time Frame Analysis Matters

You might be wondering, why bother with different time frames? Well, multiple time frame analysis is an essential part of successful trading. This technique follows a top-down approach when trading, allowing traders to gauge the longer-term trend while spotting ideal entries on a smaller time frame chart​.

For example, if you're viewing the trend on an hourly chart, you can zoom into the 10-minute or 15-minute chart for suitable entries. This way, you get an indication of shorter-term developments, and the hourly chart lets you monitor the trade’s progress going forward​.

Being Rational, Not Emotional

Here's a scenario I've encountered a few times: I see a nice long-term trend and decide to enter a trade. But then the chart starts fluctuating, and I get emotional. I know I've done all the due diligence, studied the trend, and made an informed decision. So why the sudden rush of emotions?

The reality is, every time we enter a trade, we have a 50% chance of being wrong and right at the same time. This might sound intimidating, but it's the truth. The market is unpredictable, and external events can change the course of a pattern. The key is to stay rational, not emotional. Study the past data, trust your intuition if it's backed by past patterns, but don't be fixed in one direction​.

Listening to the Market

As traders, we should always listen to what the market tells us. It might sound like a cliche, but it's a principle that's served me well in my trading journey. If the market isn't clearly indicating where it's going, it's better not to take a position. The goal is to make informed decisions, not to gamble.

Understanding trading trends across different time frames is crucial for any trader, regardless of your trading style. Whether you're a long-term trader or a scalper, keeping an eye on the bigger picture while focusing on the smaller details can make all the difference in your trading success.

Remember, trading is as much about knowledge as it is about patience and discipline. Keep learning, keep growing, and keep trading. Until next time, happy trading!


More Stories

Cover Image for How to Win Trading: Stop Leaving Profits on the Table

How to Win Trading: Stop Leaving Profits on the Table

Lessons

Let me paint a picture we're all too familiar with. You've studied the market trends, and you're certain about the direction of a trade. It starts off well; the profit shoots up, and you're riding high on optimism. But then, a slow reversal begins. You're still convinced you're right. It's just a short-term fluctuation, you tell yourself. And you may be right. The long-term direction might hit exactly the price point that you were aiming for. But the intermediate price actions are nothing like what you predicted.

Sorakthun Ly
Cover Image for Risk and Me: A Trader's Journey Towards Rational Decision Making

Risk and Me: A Trader's Journey Towards Rational Decision Making

Lessons

There's something about risk that's both enticing and terrifying. The thrill of a potential win, the dread of a possible loss—it's a constant tug-of-war. And, surprisingly, I found that rather than being afraid of losing a big amount of money, I would hold out on a position, hoping for a win to materialize.

Sorakthun Ly