How to trade when multiple timeframes are in conflict

Author:

Rayner Teo

Keywords:

askrayner

Subtitles:

[Music] hey hey what's up my friend so welcome back to the fifth right pretty fast right the fifth episode of ask Raymond right and in today's episode I've got a question from a subscriber who asked me right hey Raina how do you actually know handle conflicting time frames I'm sure this is something that we all can relate right you wanna you know go along on the trade let's say on the daily timeframe now you know go look and then if you go up to the higher time frame like the weekly or monthly you realize that the market is in a downtrend what do you do so I'll cover all this and more in today's episode see you there okay so in today's episode of ask Raina write the question from a subscriber who asked me right how do you handle conflicting time frames so I want to share with you a few practical solution that you can adopt right that's really a know one size fit all right you really depends on you know what is your goals of trading what is your trading style and then you can choose appropriate solution for your trading all right the first thing first is number one has not won in two time frames the reason why I say this is because if you were to you know look through enough time frames there will be bound to be time-based time frames which are at conflict with one another right for example let's say you're looking at this chart this is the chart of the dollar gives the African rent this is the five minutes chart and you can see that this is you know pretty much in an uptrend but if you go down to the daily timeframe it's in a downtrend right or if you go to the ohio weekly timeframe it pretty much though is this is even worse this could be either down Fred an uptrend or r HD depends on where you start looking your chart from so you can see that if you look through you know enough time frame like this is the one hour looks like an uptrend to me the follower looks like a down trade right you can see that you know if you look at two very timeframe so you are going to get analysis paralysis some it's going to say an uptrend some is going to be the downtrend something's going to be the range and some we don't know what is you know it's doing right so this is why I say keep your timeframes - not modded - timeframes now moving on the next thing that you want to do is to define the trend right I think when people talk about trend right you always think about your higher highs higher lows but there is you know pretty subjective right let me explain why if you look at this chart again right the dollar against the African rent I'm sure this is pretty straight forward you can agree that this is pretty much in the down trend because you see a series of you know lower highs over here right but what happens when you go up to a timeframe like this this is the weekly timeframe is this in an uptrend or downtrend and now you realize that no it's pretty hard to define if you were to use you know higher lows or higher heights for example over here is pretty clear it's an uptrend but what happens when this market forms a new low over here and in some meetings start making lower low and lower high so is this a downtrend now or is this still in a longer term uptrend so what is the trend right now so can you see right then defining the thread in using this approach can be subjective because if you were to look the thread just from this portion to this portion of this time period then yes that thread is down but if you want to look from all the way from the left side to the right side then this could be still in a longer term uptrend so this is why you want to define the trend objectively using a simple measure a simple filter to tell you that you know whether you should be long or short and again right a simple filter that I use something that you should be familiar with by now it's just the 200 period moving average if the market is above the 200 period moving average I look to look if the market is below like this daily time if the market is below the 200 period moving average I look too short so this is how I define the trend objectively right I don't look at your higher highs higher lows even though it can be useful but as you've seen earlier of this weekly time frame it can be subjective because this approach really depends on how far back in time you want to look at the chart okay so I just use the 200 period moving average to define the trend moving on right that's something you can do is they do what if you define the trend and you realize that let's say you know the daily timeframe the market is above the 200 period moving average but on the weekly timeframe the prices you know below the 200 period moving average so let's pour the time right even though you have defined the trend even though you have used to time phrase the the that friends are still incomplete so let me explain once more let's say be on a daily timeframe the price is above the 200 ma on the weekly timeframe the price is below the 200 MB so clearly at this point in time line you still have a conflict so what do you do right what you can do is again right wait for it to align wait for both timeframes to align themselves there is you know the obviously an issue that you've to consider about this approach is that you cook this a big move right if you are waiting for all the stars to align and sometimes if you were to wait for all the starts to align or the for the two different time frames to online you may not get many trading setups right so this one way to overcome is to it will create a large number of markets you if you're trading I know 50 60 markets then yeah you can wait for you know both time frames to align themselves okay the second solution is to be more conservative with your target profit right so let me explain so for example right on this weekly timeframe right off the dollar if you can rent the longer-term trend is still up because price is above the 200 period moving average but on the daily timeframe you notice that you know price is already below it right let's say for example you went shot of this are this perhaps the break of this low over here right price or rejected higher and your wedge shot on the break of this look right and you saw earlier that on the weekly timeframe the trend is actually up so what you can do is to be more conservative with your profit target because you do that on the higher time frame the longer-term trend is to up suppress or instead of you know writing for a full move or food friend you could look to take a profit or rather to take a more conservative you know profit target like perhaps you look at this area of support over here so if price comes into this area of support you look to get out the tree right this is a possible way to handle the conflicting time frame and lastly what you can do is to do is to just focus on your entry timeframe right this is I was a more applicable to trend followers or Fortran follows systematic trend followers they don't really look at it all not multiple times they just focus on their entry timeframe right they have a specific trading setup and they just take it irregardless of you know what the higher time frame is too weak so I could explain this so let's say again right on this same chart the dollar African rent you took the same setup right say for example you took this cell setup right baby price did a false break of this height you went shot right and you just straight according to this time frame that you'll see over here right you don't even look at this weekly time frame over here true right the weekly could be in an uptrend but it's a trend follower you choose to give more weight age to this a particular time frame that you're trading on so whatever trading entries and signals you get it's all based on your entry timeframes and I would say this is very relevant for systemic trend followers where they just they don't pick their entry signal right if it's long they go long if it's shot the go shot and they don't look at you know what the higher time frame is do it right so this is more a more systematic way of creating right about there you know there can be pros and cons to both side of it for example the causes that you know you may be trading against the higher time frame right by the pros of it is that you could be you know entering the trade where there could be a huge profit potential because you know what could possibly happen is that perhaps this could be a start of a new downtrend right where the market right brings this area of support at a continued lower so for those who just you know focus on their time frame they could usually get it earlier and a start of the move that is still not apparent on the higher time frame okay so with that right let's do a quick recap right so firstly right to overcome the issue of you know conflicting time frames right I suggest to have not more than two time frames right perhaps you can use the daily and weekly or the one-hour and forward maybe even the forward daily is really up to you to choose your to time pricks right the key thing is that you don't want both time frames to be too near or too far apart like for example the five minutes time frame and the monthly time frame doesn't really make sense if you ask me right so you want to space your two time frames you know enough okay second take all right I teach you how to actually define the trend I use just simply the 200 period moving average if the market is above it look too long the market is below it I look to shop right you don't have to use the 200 you can use maybe zero one hundred and fifty hundred seventy it really is a good bit much of a difference right but for me I just stick to the two hundred period moving average and the third thing you can do is to actually go wait for both timeframes to align themselves right before you take on the tree however I shared that error if you were to do that you may not get many trading setups right so one way to work around it is to create more markets first thing you can do is to be more conservative with your target profit since you know it'll perhaps you are creating against the highest timeframe trend you can actually be more conservative with your target profit okay this is more suitable for three swing traders right for those you're just looking to take one swing to the market and lastly right what you can do is just you know everything else and just focus on your entry timeframe right this is more suitable or rather very suitable right for systematic trend-following where they just focus on their timeframe right all your entries and exits are all based on their entry timeframe right so I hope this five tips right would help you you know handle our Sato having better trade when there is completing time frames up there okay so with that right I've come to the end of this episode of a screener right I hope you know you found it useful because if you do right feel free to hit the subscribe button and the like button below and if you have any questions for me that you want me to answer leave it in the comment section below with that I wish you good luck good trading talk to users