FOREX THEORY
Why You Should Look at Multiple Time Frames When Trading
Forex
Before we explain how to do multiple time frame analysis for
your forex trading, we feel that it’s necessary to point out why you should
actually flip through the different time frames.
After all, isn’t it hard enough analyzing just one chart as
a forex trader?
You’ve got a billion indicators on, you’ve gotta read up on
economic news, you’ve got basketball practice, a Call of Duty session, a hot
date at McDonald’s…
Well, let’s play a game called “Long or Short” to show why
you should be paying attention and putting in the extra effort to look at
different time frames.
The rules of the game are easy. You look at a chart and you
decide whether to go long or short. Easy, right? Okay, ready?
Let’s take a look at the 10 minute chart of GBP/USD on July
1, 2010 (7/01/2010) at 8:00 am GMT.
We’ve got the 200 simple moving average on,
which appears to be holding as resistance.
With price testing the resistance and forming a doji, it
seems like a good time to short right?
We’ll take that as a yes.
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