Lesson 7: Combining All Three
When you put all three time frames together to analyze a certain
currency pair, your chances of winning a trade will increase. Performing the
top-down analysis promotes trading with fairly bigger trends. As a matter of fact, this
alone minimizes risk as the odds of price action eventually continuing on the longer
trend, go up.
Taking this theory into consideration, optimism in a trade should be
measured by how the time frames are arranged. If the larger trend, for instance, is
leaning on the upside. If the larger trend for instance, is leaning on the upside but the
medium and short trends are leaning on the downside, cautious shorts must be
used with practical profit targets and stops. On the other hand, you have the option
to wait until a bearish wave heads toward lower frequency charts and tries to go long
at a good level when the three time frames align once more. Including various time
frames to examine trades also enables you to spot support and resistance readings
as well as solid entry and exit levels.
Your likelihood of succeeding grows further when it is followed on a
short-term chart thanks to your ability to steer clear of weak entry prices, poorly
positioned stops, and/or irrational targets.