Importance of multiple time frame analysis in trading business

People are always biased with the use of the indicators. Novice traders always think that they can avoid false trading signals in the market without doing the proper data analysis. But if you want to keep your fund safe, you need to rely on multiple time frame analysis rather than indicators reading. We are not saying that the indicators are bad for retail traders. But if you compare the functions of the indicators with the multiple time frame analysis process, indicators tend to be a bit riskier. 

In this article, we are going to discuss the importance of multiple time frame analysis in the trading profession. After reading this article, you should be able to find the good and bad trade signals just by analyzing the data in the different time frames.

Identifying the false signals

With the help of the multiple time frame analysis, you can easily identify the false trading signals in the market. The rookie traders often think they know every bit of detail about the market. They keep on trading the market in a very aggressive way and expect to make more money. But once they learn to analyze the higher and lower time frame at the same time, they can easily identify the false trade signals. For instance, if you spot a long trade setup in the minute 30 chart, you can check its validity by analyzing the H1, H4, or the daily chart. If the higher time frame chart gives you a sell signal, you should consider the 30-minute chart signal as invalid.

Finding the support and resistance

With the help of the multiple time frame analysis, you can easily find the minor support and resistance level. The top traders at Saxo Bank often rely on the multiple time frame analysis processes to find reliable trade signals in the different time frames. Unless you learn the key techniques to find the critical support and resistance level in different time frames, you will never learn to set your profit target in the right area. It might take some time and you must not lose confidence. In fact, it would be wise to learn about the support and resistance level system in the demo trading account.

Analyzing the news factors

Professional traders always analyze different time frame data to trade the major news. Everyone knows trading news data is a very tough task. This is due to the fact, very few traders actually know the proper way to analyze the different time frame data for the same asset. Once you learn this technique, you can easily blend the technical and fundamental data and find reliable trade signals in the market. Never think you can trade the key news without learning about the multiple time frame analysis. 

As a new trader, you should not be more focused on the news trading process. We strongly recommend that you learn about the technical factors first. Once you become good at analyzing the technical data, you may start trading the major news and expect to make regular profit in the lower time frame.

Helps you to find the weak spot

When you will do the multiple time frame analysis in a systematic way, you will slowly learn to identify the weak spot in the market. Most novice traders often get confused with their actions as they don’t have the skills to identify the weakness in their trading strategies. But if you ask a professional trader about their weakness, you will be surprised to know that they can give a long list. So, how do they deal with their weakness and make consistent profit in the retail trading industry? Well, the answer lies within the multiple time frame analysis processes. You must learn to analyze the different time frame data and only then you can improve your trade execution process.

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