The Best Timeframes To Trade Using Top-Down Analysis

it doesn't matter what strategy you learn how much time you spend on youtube learning about forex and what books you read if you do not know the time frame that you are planning to trade with and are comfortable with then to be honest with you there's not really much success that's going to come from it and it's one thing that i found out from very early on when i was trading a lot of people were talking about trading the monthly time frames that's the true directional bias of the market if the monthly time frames are trending up that's where you should buy the markets or that's what you should do in terms of taking trades buy the markets if the weekly time frames showing that it's trending down and making lower lows and lower highs then you should sell the market because that's what the institutions are doing then things like trade the daily time frame because that's the true direction of the bias that's what the banks are trading that's where the key levels are that's where the institution institutions had their their orders and for so long for i would say two years i was on the daily time frame plotting my key levels at resistance intermediate levels and before you knew it i had 10 12 15 levels then i scaled down to the lower time frames like the 15 minutes to five minutes and i take a trade and after taking the trade no matter what pattern was there that i used to read about engulfing candles doji's karami's whatever you want to call them ease i used to take those trades and then find out that even if i put my stop-loss above some of the structures or the key levels price would stop me out i need to ask myself why why am i constantly getting stopped out and it was only till later on down the line did i realize the huge difference between the weekly monthly daily and then your intraday time frames like the 30 minute 15 minute five minute and one minute they correlate because whatever happens on the one minute time frame is happening on the weekly time frame or the monthly time frame or the yearly time frame every single candle from a higher time frame scaling down just breaks down into smaller candles right different structures but in the same direction so i thought about it for a very long period of time and i found out that you cannot no matter what anybody tells you i'm telling you now here first you cannot be using higher time frame time frames to trade lower time frames if you're intraday trading or you're scalping and think that you're going to find the best confluence just because the key level is solid it really doesn't work like that and i remember an example when i was a lot younger i got into golf i think i was about 18 19 just got married and one of my escapisms just to get out free my mind do my own thing was to play golf great hobby i recommend it to every single one of you and before i started as you do you go on youtube you do your research you figure out how to do this and do that what golf clubs you should buy et cetera et cetera but the coff the golf clubs that i wanted to buy were too expensive or was recommended as the best was too expensive no matter what forum i went on the golf clubs that were recommended were too expensive and eventually i settled for some golf clubs from a sports shop we have in the uk called sports direct and i think i remember getting my paycheck invest in i think it was about 99 pound or just below 100 pounds something like that on these golf clubs and i i was a static went got my membership to a really nice golf course can't remember the name now nine hole 18 hole driving range the whole lot got on the course with my glove put my lock my fingers in and i just couldn't work out why my golf ball kept going straight and then left and then straighten them right and then somebody else would come after me or would be before me and they'll drive it off the range or the team and the ball will go straight and as you do when your ball continues to go to this way or that way or your trading starts to go downhill you start to do more research and ask questions so i'd ask the questions and i said to this guy what golf clubs do you have and he mentioned a name i can't remember now and um suggested some names and i was like oh okay then i asked another person then i asked another person and then eventually i was like ah the reason why my golf is not improving is because of my golf clubs so i went done some research and um i think i come across some golf clubs cobra galloway or something like that and i bought another set of golf clubs went back onto the uh golf course as you do i know it's like not like that so don't take the p i know what it's like but i'm not going to do the full swing now but the point is i went back out the ball went straight and at the end darted off to the left went straight started off to the right i just couldn't i was just so upset you know you spend more money so then i asked more questions researched and then i realized something during my research it doesn't matter what golf clubs you get or how much you spend on them more often than not unless the golf clubs are custom made to your height to your grip and the weight of them in terms of the power of your swing you're not really going to get the full potential out of the set of clubs you've got what does it mean for you well you're going to ask the question did i ever get a new set of custom golf clubs i didn't no i was working a nine to five i was very young i had bills to pay and i did not have 700 or 800 pounds to buy the cheapest set of custom golf clubs so unfortunately i never never was able to experience playing golf to potentially the highest standard that maybe i could have been right you never know anyway what's the point i'm trying to make just because joe bloggs or george or bob and his uncle are trading the daily time frame it doesn't mean that it's going to suit you you have to ask yourself a few questions and figure out if the time frames you're trading are suited for you or not you have to ask yourself does the time frame i want to trade fit my schedule that's the first question you need to be asking yourself what's the point in trading a daily or weekly time frame or using those time frames for key levels if you're entering on the five minute time time frame and the range is 10 times or 20 times larger than is necessary for you to place a stop loss or if you do place a smaller stop loss be stopped out by the smaller the bigger ranges on the higher time frames so does your schedule allow you to trade the five minute time frame if it does then why are using the daily and the weekly for your key levels we're going to go into this in a minute in terms of how you should be selecting your time frames or know how you should be using your time frames but that's one of the questions you've got to be asking yourself does my schedule allow for me to trade this time frame if so then will that work with the strategy i'm using the next question you really need to be asking yourself is this do you cope well with being on the charts for a long period of time that means that if you plan to trade the five minute time frame you have to understand that your attention to detail is going to be much greater than if you're trading the daily time frame meaning you're going to have to be on the chart for a longer period of time but if you're not the type of person that's able to sit on the charts without making up too many stories and wanting to impulsively jump on into trades then in theory you shouldn't be on the five minute time frame again i don't care what your daily or weekly or your four hours doing if you're trading the five minutes you need to ask yourself can i be sitting there for long periods of time if so what time frames do i need in order to help me trade the five minute well more often than not you're going to need a time frame above that to look for behavior and one time frame above that to look for structure the daily is not going to help you in these instances now a lot of people will say yes it does but i'm telling you now in fact it doesn't and i can prove that and i can also prove you do not need the higher time frames to trade the five minutes so that's another one of the questions you've got to ask yourself another one of the questions you've got to ask yourself is are you mentally stable enough to be able to take a trade and look at the charts let's say you're on the one minute time frame you need again more attention to detail here the candles move very quickly they close very quickly and are you needing to be at the charts to make sure you can set that trade to break even trail your stops or even close your trades early if necessary but are you stable enough to be a chart to do that or do you need to trade the hourly time frame if you're trading in one minute the question is this do you really need the audi time frame to find confidence on the one minute no you really don't and the question is this or another question you could be asking yourself i'm just throwing a few questions out here but you have to think about this yourself because it's personal just like my golf clubs my height my weight my strength my grip is is personal to me you have to figure out these questions and find out the answers yourself but the last question that i think you really should be asking yourself is this how much time do you really have to be investing in your trading are you the type of person that doesn't mind taking a trading gun about his life are you the type of person that just likes to be in and out of the markets and prefers just to sit there for three hours you have to think of those questions and you have to answer them personally yourself once you do that you'll then be able to decide what you need to trade now i'm telling you if you are trading one minute five minute 15 minute time frame you do not need the daily weekly and monthly time frames you guys are intraday traders more more so or more often or more of you should i say are intraday traders what is swing trading does that mean you're a swing trader so you need to be trading the higher time frames like the monthly and weekly not necessary you can still swing trade on the five minute time frame so the more important questions are the questions that we've just asked here or mentioned here and then you need to figure out the rest for yourselves now what i'm going to do for you because i don't want to just keep waffling on i'm just going to share a few things with you on the charts for you to have a look at and then once you go through this you can then think about it yourself and make your own decisions and i'll share one example with you how you can apply this and give you the answer you're looking for how many time frames do you really need to trade so let's head over to the charts so traders this is the question how many time frames do you need now we've already discussed there in brief the kind of questions you need to be asking yourself and you know and trying to figure out what time frames you should be trading now i'm not trying to start a debate here but what i'm telling you is if you're an intraday trader for the most of you then your monthly and your weeklies and your dailies are only as good as the time frames you trade below it okay if you're trading off of daily key levels then you only really need to be scaling down to 4h from one h if you're trading off of one h time frames here you only really need to be scaling down to maybe 15 minute five minute just because you're using the weekly and the monthly and the daily it doesn't mean your key level is going to be stronger than you know the 4h and the 1h because you have to understand the candles movements up on the weekly are huge ranges let me not try and do this here but you get the point no wick this is the candle the ranges of the weekly just moving this much creates tremendous trends on the lower time frames so if you're creating a key level on let's say your monthly time frame like this and price comes to it and you're like oh this is a major key level it's time to sell in the markets now and you take the sell and the market and on the weekly the price does this you could find that on the one hour minute 15 minute 5 minute this candle has just moved a whole trend on the lower time frames or 30 40 50 60 pips you get stopped out and then eventually when the market decides to move down it moves down not because you was wrong about the key level but because you didn't understand the range of the candles movement on the highest time frames the same data you can gather from the weekly you can also gather from the 4h and 1h granted it won't be a single candle but that's where we'll come and that's what we'll come on to next but you get more information a breakdown of that information that price is failing to bring and then you can plan your trades now if that makes sense to some of you then you're definitely on your way but if it doesn't then hopefully you get it you know at a later date but the point is here what time frame should you trade and what time frames are best for you as a personal decision just like my golf clubs were that i never was able to discover but that's just life but we got the answers to the questions we just was never able to put into action but i'm hoping now i'm telling you this you can put this into action as a trader how many time frames do you need free only you would have heard me speaking about this a lot structural time frame behavioral time frame and entry time frame what is your structural time frame for your structural time frame is for identifying the structure of the market in layman's terms it's a downtrend uptrend or ranging market that's it when you come to your structural time frame you identify that the trend is down when you move over to your behavior and your entry time frame that's the only direction you should be taking a trade if the market structure is up making higher highs and higher lows then when you go down to your behavioral time frame and your entry time frame you're only taking bias when the market is moving sideways guess what i mean this is not supposed to be here but guess what you're not trading okay that's it you're not trading so what is your structural time frame for to plot your key levels to identify the trend and just to create a simple plan are you buying or selling your behavioral time frame is used to identify what the candles are doing so if you're trading off of the 4h that's your structural time frame you then use your audi time frame to look for behavior that behavioral time frame is four candles of information that you've taken from a single candle on the forehead and broken it down into candle behaviors are there lots of quick rejections are there doji candles is there in decisions is there pin bars is there momentum candles etc etc is price breaking previous structural loads and highs creating a shift in structure looking then for potential re-test double tops double bottoms etc etc that's what you're looking for in your behavioral time frame your entry time frame is to monitor for patterns that is it very simple identify traffic areas so if you're taking a buy or a cell make sure you've got enough range to go break even before you run into problems and then look for your targets that's all your entry time frame is for so if we're using the 4h on the structure the one h for behavior just to break down the 4h candles behavior looking for those pin bars and golfing candles wick rejections breaks and structures your entry time frame is going to be let's say the 15 minute time frame your entry time frame you're going to be looking for clear trends you're going to be looking for breaks of structures you're going to be looking for your patterns and that's it free time frames so how would you work this well if you're trading the daily the answer is this you'll be looking for 4h1h if you're trading the 4h you're going to be using 4h1h 15 minute 4h 1h30 minute if using the 1h you're going to use maybe 1h 30 minute 5 minute or you're gonna use one h15 minute five minute if you're trading a 30 minute time frame for your structural time frame you're gonna be looking at maybe the 15 minute five minute or five minute one minute if you're trading the five minute time frame i mean there's not much more to go down from there but you could be looking at maybe the one minute okay so that's how we would work it i mean i said two time frames there but you get what i'm trying to illustrate here so let's take a look at one example of how we would approach this on pound usd okay so now we're on pound usd what is the first thing that we're looking for here we're looking for structure okay now looking at this pair and this time frame on the hourly chart what is the structure of this market well we can see it was in the downtrend we had a strong gap up indicating bullish sentiment we had a pullback in this market structure price wasn't breaking it so we're now continuing to identify a bullish sentiment breaking previous structural highs making new highs and then we finally had a break above structure i think it's very easy to just say based on the market's behavior and the structure that we're only looking for buyers okay that's it buyers now on an hourly time frame where are we going next well we're going down one more time frame let's look at the 15 minute time frame now looking at the 15 minute time frame we're here on this time frame and what are we looking for we are looking for behavior okay now let's uh make sure we get this a little bit bigger okay we're looking for behavior now what kind of behavior are we looking for well we've already said it we're looking for wick rejections we're looking for price to come back into our key levels to retest and we're looking for the markets to shop start showing signs of it failing to break below structure or price respecting previous structure levels so if you can see clearly here we have really strong bullish sentiment into this key level in terms of behavior we have really strong bearish candles and now we're starting to see a depletion in these bearish candles okay what we want to see from this key level is the price starting to hold we don't want to see price break any structures and in terms of visualization as part of an uptrend that we're looking to buy we want to see the market making what higher highs and higher lows we also want to see price coming to key levels and we don't want to see price breaking those key levels because if the sentiment is up based on our structural time frame then we don't expect it to break rather respect the level before going up so now the market is pushing down we have a pull back into the level that was broken as part of the structural time frame which is by meaning up prices holding this level once we see price holding this level what do we want to then do the example here in terms of behavior is price failing to break uh structure okay so that's the behavior that we've gathered once we gather this behavior what's our next plan well we said three time frames let's move on to our final one which is our entry time frame and that's going to be on the five minute chart here and a little tip for you guys on trading view if you hold control and then drag it over you can highlight all of your annotations and press delete now we're on our behavioral time frame we're not changing our bias do not be phased by what this time frame is doing we know the structure is by bias we know the behavior is price failing to break the structure now we're going to look for our patterns our patterns as part of an uptrend could be double bottoms it could be retest it could be higher low patterns it could be breakout break back ins it could be whatever the whatever you want to trade okay it's down to in your strategy i'm not here to teach you a strategy made to teach you a principle and now that's what we're looking for patterns let's go to here and type in patterns okay so you look at this three-step process structure by its behavior price fading to break structure three patterns let's continue to press next bar and see what we can find here so we can see the market is starting to push up what we're looking for the market to do is create some sort of structure we can work with and at the moment what we can see here thinking about it is we can see the market has just recently broken above this key level it's created a retest of this level and now let's say the pattern we're looking for here is a double bottom okay that's what we're waiting for because we didn't get in this trade here so we're waiting for a double bottom now we're just waiting for the price to come back to this key level to show us signs of rejection strong bearish candle and now we have a bullish candle pushing off of this level here now when looking at this some of you might be like well i'm not looking to take this trade because there's not enough evidence here well you have to understand one thing right forget about the noise to the left forget about what the daily the monthly and the weekly is doing the structure on our keylet on a structure on our structure time frame was biased the behavior on our behavioral time frame was telling us that the market was failing to break structure and now on our pattern time frame it's now telling us we have a double bottom three step process free time frames these are the structures these are the um time frames i want to trade during my trading day because it fits my schedule my personality what do you do you take the trade now what am i seeing here strong bearish candle into a key level and a bullish candle followed after that do i need to look for any more information not really because all the information i've gathered already from the higher time frames it doesn't matter how much time has passed if the momentum is still shifting up and my buyer patterns are forming i'm going to take the trade so some people might take the trade now some people might be waiting for more wick rejections or some people might be waiting for stronger engulfing candles let's say you're waiting for a stronger engulfing candle as part of your plan you can take the trade again stop loss below structure and then again go for your once free risk ratio trade something like this okay now once you have this in place the question is have you met the criteria of your trading plan well the answer is yes structure was on your side behavior was on your side and now your pattern's on your side does it mean that this trade should win no is there a chance that you could lose 40 of them if you take 100 definitely but if you're trading like this consistently you will be profitable allow the numbers to play out and you'll see the numbers start to work in your favor the point here is this it's not about winning every trade it's about approaching every trade with a winning formula wow you just hear that it's not about winning every trade is about approaching every trade with a winning formula so now we have somebody who's taking a trade because we have the bullish reaction off of this key level as a double bottom pattern in line with the structure and behavior or we have somebody who's waiting for an engulfing candle that signifies more of a bullish sentiment along with short-term behavior you take the trade trader number one hits his tp trade number two hits his tp and that my friends is how you trade using free time frames your structural time frame your behavioral time frame and your pattern time frames in terms of the last question what time frame should i trade well i've given you the formula it's now down to you to figure the rest out so there's going to be a lot of you out there that are going to be like oh rocks you just cherry-picked that trade and you just picked the perfect example and bloody bloody blah look the channel is designed to help those that want help if you can't see the points that i'm trying to make here and you're being a pessimist then i can't help you but for those that found this useful i will mention one thing not every trade you take is going to win but if you want to apply this approach to the markets and you want to see if it works for you make sure you're prepared to invest some time get on the markets back test 100 trays log them using this approach and see how you get on this is a simple price action approach to the markets using free time frames nothing more nothing less identifying the structure seeing what the behavior is based on those candles breaking them down with a time frame below it or just below it and then your entry time frame looking for your patterns once you keep it simple you're going to start to see a lot more consistency in your trading you're going to take you're going to be able to take away the guesswork and you're really going to be able to focus on the most important things when it comes to trading it's not the technical analysis it's how you maintain this and how you deal with this your emotions the more time you can focus your energy on that you'll be able to deal with losses better you'll be able to celebrate your wins without getting too overconfident and then blowing it the next day and you'll start to see that the process in trading is not about what happens now but what happens in the next 99 trades so try it out give it a go see what you think go back watch this video again take some notes and then get into the markets and try to apply it let me know what you think in the comments below if you want to see me do a few more examples like this more than happy to do so but as i always say if you enjoyed the video make sure you smash that like button for me subscribe if you haven't turn on notifications and until next time family continue to trust the process

Channel: RockzFX Academy

Views: 155,838

Keywords: best timeframes, to trade, top down, top down analysis, rockzfx, rockfx, rockz, rocksfx, price action, forex, forex strategy, best forex, consider before, taking a trade, trade, trades, timeframes

Id: CE8PQv7l_AQ

Length: 26min 11sec (1571 seconds)

Published: Sat Jan 09 2021