One of the biggest challenges traders face is the contradiction of signals from different time frames. A buy signal on the H1 chart, for example, might conflict with a sell signal on the H4 chart, creating uncertainty and leading to poorer trading decisions. In this article, we will explore how to link time frames in the most efficient way, how many time frames you should consider, and whether it’s possible to profit from trading by using just one time frame.
Why do contradictions between time frames arise?
Contradictions usually occur when the market is in a consolidation or correction phase on one time frame, while still trending on another. This can create conflicting signals, leaving traders unsure about the market’s true direction.
Each time frame presents a different perspective on the market:
- Junior time frames (M1-M30) provide quick signals but also contain significant market noise.
- Medium time frames (H1-H4) offer a more balanced analysis, useful for most day traders.
- Senior time frames (D1-W1-MN) reveal long-term trends and important levels, perfect for spotting overarching market directions.
How to link time frames correctly?
To avoid contradictions, the multiple time frame (MTF) is one of the best methods. See how you can structure your analysis due to this approach:
- Global (senior time frame) sets the primary trend. For example, if the D1 chart shows an uptrend, the priority should be to look for buying opportunities.
- Working (middle time frame) helps identify entry points that align with the global trend. For example, on the H4 chart, you might look for a pullback within the uptrend on the D1 chart.
- Precise (junior time frame) is where you fine-tune your entry. For instance, using M15 or M5 to pinpoint specific entry points.
If the overall trend is bullish on the senior time frame but shows a correction on the middle one, the junior time frame will help you find the endpoint of that correction, allowing you to enter the trend when it resumes.
How many time frames should you consider?
Ideally, three time frames offer a well-rounded perspective:
- The global trend (e.g., D1)
- The working signal (e.g., H4)
- The precise entry point (e.g., M5)
For scalpers, two time frames might be sufficient, such as M1-M5 and M15, while position traders often rely on daily (D1) and weekly (W1) charts to make decisions.
Can you trade effectively using just one time frame?
If you need, it’s possible to trade using just one time frame. However, this method raises the risk of making mistakes. If a trader relies only on one time frame, they may overlook the larger trend or fall victim to false signals during consolidation phases. To minimize this risk, you can use additional tools:
- Trend Indicators (e.g., moving averages, MACD) — these help define the overall trend.
- Support and Resistance Levels — check higher time frames for significant levels that could influence price action.
- Trend Lines — draw trend lines to assess the strength and acceleration of the trend.
- Volume Analysis — helps confirm the strength of a price move and can validate signals.
Final thoughts
The MTF method is the most effective strategy to get rid of contradictions between time frames. By analyzing three levels, global, working, and precise, traders can increase their chances of making successful trades. Even though it’s possible to trade with only one time frame, it comes with increased risk. By using a well-thought mix of time frames and additional tools, traders can boost signal accuracy and make better-informed decisions.