The concept of using two timeframes to increase the odds in trading is not a new one. However, it is a strategy that is often overlooked by many traders, especially those who are new to the game. This approach involves using a longer timeframe for the strategic view and a shorter one for the tactical view. This combination can significantly increase the odds of success in trading.
Starting with the Strategic View
The strategic view is the broader perspective that a trader takes into account when making trading decisions. This view is typically based on a longer timeframe, such as the daily, weekly, or monthly charts. The strategic view helps traders to identify the overall trend of the market, key support and resistance levels, and potential reversal points.
The strategic view is crucial because it provides a roadmap for trading. It helps traders to understand the big picture and to align their trades with the dominant market trend. For instance, if the strategic view indicates an uptrend, a trader would be looking for buying opportunities. Conversely, if the strategic view shows a downtrend, the trader would be looking for selling opportunities.
Using the Tactical View
While the strategic view provides the overall direction for trading, the tactical view helps to fine-tune the entry and exit points. The tactical view is based on a shorter timeframe, such as the hourly or 15-minute charts. This view allows traders to zoom in on the price action and to identify the optimal points to enter and exit trades.
The tactical view complements the strategic view by providing more detailed information about the market. It helps traders to pinpoint the exact levels to place their orders, to set their stop losses and take profit levels, and to manage their trades more effectively.
Combining the Strategic and Tactical Views
The combination of the strategic and tactical views can significantly increase the odds of success in trading. This is because it allows traders to align their trades with the dominant market trend and to fine-tune their entry and exit points.
For instance, if the strategic view indicates an uptrend, a trader would be looking for buying opportunities on the tactical view. The trader would be looking for pullbacks or retracements on the shorter timeframe to enter long positions. Similarly, if the strategic view shows a downtrend, the trader would be looking for rallies or retracements on the shorter timeframe to enter short positions.
The use of two timeframes also helps to manage risk more effectively. By aligning trades with the dominant market trend, traders can increase the probability of their trades being successful. Moreover, by fine-tuning the entry and exit points, traders can minimize their risk and maximize their potential profits.
In conclusion, using two timeframes to increase the odds is a powerful trading strategy. It involves using a longer timeframe for the strategic view and a shorter one for the tactical view. This combination can significantly increase the odds of success in trading by providing a clearer picture of the market, aligning trades with the dominant trend, and fine-tuning the entry and exit points.