Time Frame Analysis
This is a crucial part for a trader and investor. Time frame analysis is important because you will both buy and sell the trade on the candle of that time frame.
1 min, 3 min, 5 min, 15 min, 1h, 4h, 1D.
Taking a trade on the 1 min time frame is like gambling; one should not take a 1 min trade. This is because you will see a profit on every single candle and you will start taking a trade on every single candle every time.
The candle formed in the 3 min time frame is mostly used for scalping.
Trading is done using 5 min and 15 min candles. And 30 min, 1h, and 4h are used for analysis.
Let’s understand this in detail. If you are doing day trading, i.e., intraday, then the 4h and 1h time frames are very important for you. This is because you need to look for support and resistance in the 4h candles. After this, you need to see if the 4h candles that have formed are a hammer candle or an inverted hammer, or any other candle. Then you need to check if there is any pending liquidity in the 4h candles or not. After seeing all this, you need to mark it with a trend line. When this 4h analysis is complete, you should move to the 1h time frame.
In the 1h time frame, you again need to find and mark the support and resistance. In the 1h time frame, you also need to look at the candles to see if there are any candles that are creating an entry for us on the buy side or the sell side. After this analysis is complete, you should move to the 30 min candles.
In the 30 min candles, you just need to find support and resistance, and then you should move to the 15 min candles.
In the 15 min candles, you again need to find support and resistance, and also look for candles that show an entry on the buying side or selling side. And it is in the 15 min candles that we need to decide whether an entry is forming on the buying side or the selling side. When this is decided, you should take the entry on the 5 min candle.
You should stay in the market for just 3 candles or 2 candles of the 5 min time frame, and as I have mentioned, you have to maintain the risk/reward within that. Do not take more than 3 trades. Manage your money so that you can survive for many days.
One thing I have repeatedly mentioned is that you have to draw support and resistance on every single time frame. This is because in the bigger time frame, you will see clear pending liquidity, and you will also see that wherever the 4h candle closes on the lower side, the market comes and forms support there. The same happens with resistance as well. The market keeps respecting that level unless there is some bad news in the market.
Time frame is analysed this way; there is no other way. Understand it like this: the larger time frame, the 4h, is the biggest support if it forms at the bottom. The market can take support only up to this point unless there is any bad news. In simple language, the 4h is the biggest support.
And similarly, every time frame is support and resistance. Why did I say that after analysing the 15 min time frame, you should take a trade on the 5 min candle? This is because when you mark the 15 min support, and when the market comes near that support, the chances of the market reversing are higher.
Now the question is, can it not reverse on the 5 min candle? The answer is 50%-50%. If the trend is in your favour, it might reverse after 3 candles of the 5 min time frame, which means it will reverse after taking the pending liquidity from the 15 min support.
Note – Some people create support on the 5 min candle, find pending liquidity, and take trades on the 1 min candle. And mostly, such people get trapped and lose all their money. This is because they do not plan their trades by calculation; they only gamble. When you lose half your money, the thought of taking a trade on the 1 min time frame will surely cross your mind. That is the time when you need to control your mind, manage your money with the right mindset, and work on a single risk/reward, such as 1:1, 1:2. Do not go beyond this, and work on a single setup until your capital triples. Only after that should you increase the lot size and also increase the risk/reward.