Query regarding multiple timeframe strategy

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Query regarding multiple timeframe strategy

Postby vaibhavjain » Sun Aug 02, 2009 5:14 pm

Hi Edwards,
I must admit that are you doing an excellent work in educating people about forex.
I am truley amazed by the professionalism and your knowledge in this field, simply by seeing your responses in handling people's queries for any of the listes strategies on the site.

I have undergone a forex course myself, and to begin with, I want to concentrate on building up a multiple timeframe strategy.
So, what I intend to do is to identify a trade using any of the indicators in a longer period timeframe, say daily, and using the same indicator, find the same trading signal on shorter timeframes like hourly. I want to work my strategy for indicators like RSI, STOCHASTIC, EMA CROSSOVERS, MACD, ETC..

But the point I am clueless about is which periods(parameter) to choose for each indicator in different timeframes.
For instance, if I intend to use crossover of EMA(7) and EMA(20) as a system, do I need to use this system on daily timeframe to generate some signal, and then wait for the same crossover system to generate the same signal in 4 or 1 hour timeframe???
Or would I need to use different parameters for EMA crossovers in daily and hourly timeframes, in order for multiple timeframe strategy to work??

Similarly, I plan to use the default of RSI(14), stoch(5,3,3), MACD(12,26,9) etc. individually on multiple timeframes.

So, can you please advise, and clarify if I need to use the same parameters for an indicator in both timeframes?? Or if this is not the right way to go about, please suggest me a rule that allows me to best choose the correct length of indicators in different timeframes..

I hope I have been able to express myself correct to exactly what I am looking for.
Your response would be highly appreciated, and I would be obliged.

Thanking You
Vaibhav Jain
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Re: Query regarding multiple timeframe strategy

Postby Edward Revy » Sun Aug 02, 2009 6:43 pm

Thank you, Vaibhav

You took the right course for multiple time frame analysis.
I'd recommend starting with 2 time frames for now. Take either:
daily + hourly
OR
4 hour + 30 (or 15) minutes.

There will be absolutely no need to change indicator settings. Especially so for MACD and Stochastic. With RSI too, but here you can play a bit, testing RSI 6, for example, and use it, again, for both time frames.
Same for Moving averages, 7 and 20 can be used across all time frames, but for higher ones you may (or may not :) ) also consider adding one more average, for example - 50 SMA.

The whole point is, there is no need to change anything (it should work just fine), more so do it in advance. Once you start testing the system, you'll see what and when can be adjusted, or even add/remove an indicator or two.

Regards,
Edward
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Re: Query regarding multiple timeframe strategy

Postby vaibhavjain » Fri Aug 07, 2009 10:53 am

Thanks a lot Edwards for taking time for putting your input, and sound clarification.
I have one more thing to ask from you, which might interest you a lot.
Have you heard about delta trading phenomenon which helps to predict future quite accurately. Market tops and bottoms could be predicted at the exact timeframe in the future. I have the e-book for it, and trying to learn the method.
Moreover, I don't know how to actually apply the method. But I could clearly see that it is a very good method and quite interesting.
If you take some time out to study this, and then come out with some method as to how to build this strategy and trade with it, I think members like me would be delighted.
One person who is very actively and sharing the strategy on delta trading writes in his blog:
http://cmellon-deltatrading.blogspot.com/

Let me know what you think about this delta trading, and your plans about it.
Very excited to hear from your side and your inputs on this.

Rgds
Vaibhav
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Re: Query regarding multiple timeframe strategy

Postby Edward Revy » Sun Aug 09, 2009 6:32 pm

It is something new to me too.
From what I understood they use cycles: daily, monthly, yearly etc, that's always interesting.
What I disliked was that the cycle theory itself was actually based on moon cycles, and I'm not a big fan of astrological forecasts.

I'll see how it turns, at least I'll keep it in mind. Thank you, Vaibhav
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