One of the fundamental planks of any trading approach

One of the fundamental planks of any trading approach

One of the fundamental planks of any trading approach is in using multiple timeframes as this gives a view across the time window from the fastest to the slowest, and identifies changes in trend which occur in the fastest timeframe and then ripple through to the slowest. In this example we focus on the spot forex market and the GBP/USD currency pair.

00:11

Introduction to trading instruments and focus

00:11

The speaker discusses the challenge traders face in selecting currencies and currency pairs, especially in Forex where there are many options. They explain that traders in other markets, like indices or commodities, often focus on just one or two instruments they know well, which simplifies their trading decisions. In contrast, Forex and stocks offer a wide variety, making it harder for beginners to decide where to start.

01:15

Volatility and multi-timeframe analysis

01:15

The speaker discusses their approach to the forex market, emphasizing the importance of understanding volatility. They reference charts available on their Forex Facebook page, which provide a narrative context. The discussion highlights the use of multiple timeframes for analysis, including non-time-based charts like the raincoat chart, as well as 3-minute, 10-minute, and hourly charts. The hourly chart is particularly important for identifying weekly levels, while faster timeframes help with intraday trading and finding confluence in levels.

02:27

Using hourly and intraday charts for levels

02:27

The speaker explains the importance of identifying strong levels appearing on both faster and higher timeframes, with a preference for the hourly chart. They discuss the situation on the 10-minute chart for the British Pound (cable), focusing on a currency strength indicator called the currency matrix. The speaker attempts to adjust the chart settings by increasing the number of days to better visualize the data for the dollar and British Pound but encounters difficulty due to insufficient data in the selected timeframe.

03:44

Cable 10-minute chart trading setup

03:44

The segment discusses a trading setup observed on the 10-minute chart around 10:30 AM. It highlights typical price action in Forex pairs where the London session may show congestion followed by movement during the US session. The example given is the cable pair, which can exhibit moves in either or both sessions. This morning, a cross on two lines appeared on the CSI indicator after a period of congestion around the volume point of control, signaling a potential trading opportunity.

04:55

Breakaway trade and volume analysis

04:55

The segment discusses a breakaway trade identified on a ten-minute chart, characterized by a rising volume which, although not massive, indicated a potential strong move. The speaker explains that breakaway trading offers a clear placement for stop-loss orders, typically just below the breakout point. Additionally, the volume point of control is considered important for setting these levels. The analysis references multiple charts, including Camarillo and others, to identify potential price targets around 2665. The discussion highlights the advantage of using multiple charts to avoid misinterpreting sudden reversals as abrupt stops.

05:58

Volatility candle and trade reversal

05:58

The segment explains the analysis of multiple timeframes, focusing on the five-minute chart. It describes a volatility candle that triggered a reversal within the candle’s spread, illustrating how volatility signals on the five-minute chart can indicate potential price movements.

06:35

Choosing timeframes based on comfort

06:35

The speaker discusses the common question of which time frame to trade, emphasizing that there is no one-size-fits-all answer. Traders should use the time frames they feel most comfortable with. Some, like David, trade very fast time frames such as 15 or 30 seconds without issue, while others may find fast price action tiring and difficult to follow. The speaker mentions that faster time frames can show choppy price action with many candle wicks, which can be smoothed using renko charts. Ultimately, the choice depends on individual preferences and practical considerations like available time, stop-loss management, position size, and capital. The example given involves a trade triggered on the five-minute chart.

08:07

Volatility candles reveal trading opportunities

08:07

The speaker discusses the significance of volatility candles and how reversals on different timeframes present tradable opportunities. They emphasize that comfort with these opportunities depends on the trader’s chosen timeframe, such as using a second chart for faster trades. The conversation then shifts to reviewing the British Pound, specifically the Cable pair and other selected pound pairs, focusing on their performance during the afternoon session.

By Anna Coulling – creator of volume price analysis