Newbie Multi Time Frame Questions

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Newbie Multi Time Frame Questions

Postby airways62 » Thu Apr 08, 2010 12:52 pm

Hello,

Im trying to establish a trading plan, and would appreciate some guidance.
I have been attempting to work with multi time frames (4hr,1Hr,5Min) using the 4Hr time frame to identify the main trend.
Where the market price has been above or below the 200 sma for a period of time, this is the direction of the trend (above sma= long, below sma= short)
I want to use the MACD (12;26;9) to help me confirm the trend.

After establishing from the 4Hr time frame whether the market price is below (short) or above (long) the 200 sma, I then switch to the 1Hr time frame to help identify a potential trade using the MACD. But here is where I sometimes get confused?

Q: If I am looking to trade long, does the MACD line need to be in positive territory (i.e. above the zero line) and pointing up, or is it ok to trade long when the MACD lines have crossed whilst in negative territory (i.e. below the zero line) but also pointing up?

Q: By switching to the 5Min time frame to find an entry point, should the MACD lines agree with the 1H time frame?

Q: I assume the opposite would be the case for short trades?

OR - Should I just use 2 time frames and trade in the direction of the MACD from the 4Hr?

I would appreciate any guidance.
Thanks
airways62
 
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Joined: Thu Apr 08, 2010 11:04 am

Re: Newbie Multi Time Frame Questions

Postby scottshubert » Thu Jun 10, 2010 10:16 pm

Hello. Trend following and trading in the direction of the trend is an excellent way to have a simple and effective trading method. MACD is really just a way of plotting two moving averages and instead of showing the moving averages themselves you are seeing a graph of lines that represent the convergence and divergence of the moving averages. So why not just look at the moving averages themselves? Confirm the direction on the longer time frame and then enter when moving averages EITHER cross in the direction of the trend OR compress and continue with angle in the direction of the trend. You can hardly go wrong doing this and it will haul in piles of PIPS although I currently use a more precise method that does not use moving averages.

Scott
scottshubert
 
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Joined: Mon Apr 19, 2010 5:27 am


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