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Price Action And Understanding Multiple Market Modes Using Trade Station Indicators

Advanced TradeStation indicators can provide multiple time frame (MTF) price action.  Price action is undisputedly the most important fact in trading.  If you use multiple time frames to track price action you will increase the effectiveness of your trading edge many fold.  The interaction of the different time frames provides great information regarding which market mode you are trading.  This article will explain how MTF price indicator will tell you what market mode you are in.   Knowing this will assist you to greatly improve your trade management.

The 3 major market modes are consolidation, trend (up-trend or down-trend), and choppy (a trading range).  Every financial instrument goes through these three market modes on any chart.  The interplay of a multiple time frame price indicator shows at a glance when you are in an up-trend, a down-trend, when you have a MTF consolidation, and/or when you are trading a choppy market.

First, let’s focus on consolidation.  A consolidation can be any of the following types; price, volume, volatility, or oscillating inside a trading range.  Price consolidation across multiple time frames gives the most powerful consolidation breakout trades.  With a MTF consolidation, TradeStation traders can typically get breakouts that will sometimes go on for several days. 
This is a very powerful method of trading.  The MTF Price Action Consolidation trade set-up is present when all the price trend lines are collapsed into a tight range.

The second major market mode is trend.  A MTF up-trend is shown by the expansion of the interaction of the different MTF trend lines.  You’ll see this where the shortest trend line is breaking out to the upside and the MTF lines are fanning out into a ribbon.  But don’t be mistaken; simple moving average ribbons are nothing more than a single time frame indicator using multiple different lagging lines.  Unlike the simple moving average ribbon, a MTF price indicator has nothing to do with lagging lines.  In fact, the MTF trend line lags no more than one and a half bars, and yet it shows a smooth price line.  The interaction between the MTF lines is very useful.

You can also see a MTF trading range.  When you go into a choppy market or a trading range, the interaction of the MTF trend lines will show a trading range inside several higher time frame lines and the shortest line will be oscillating between the longer time lines.

You have a big advantage when you know what market mode you are trading in and know how to appropriately trade that market mode.  With a quick glance at a multiple time frame price action TradeStation indicator, this information will be at your fingertips to advance your trading success.

Forex Trading Articles

Forex Trading Times Chart – Trading Forex on Multiple Time Frames

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Forex Trading Times Chart

One of the most common mistakes of new traders is to take a trade while looking at a trend from only one time frame. Every single trader has a time frame he/she prefers to focus in on, whether it be day chart, week charts or even 5 minute charts. The problem arises when you are looking only at your own chart level without looking to a higher chart level for confirmation of a trend.

The reason it’s so important is because the longer a resistance level develops, the more powerful the resistance is. So if there is a tremendous catalyst on the day charts that has been hit numerous times over the past few months without a break in the trend, and you are looking for confirmation solely on the hour charts for the formation of an ascending triangle that will break the pattern, you may be sorely disappointed.

The day chart indicates a weakening upward momentum on which there is not sufficient buying energy to break the catalyst, even though the hour charts are a sure indication that the price will break through. So you buy, and get stopped out immediately. It’s a common and simple mistake, which means it’s easy to analyze and fix after it’s been made, but don’t let it continuously happen to you. Here’s a few tips to help avoid getting caught looking at the trees and missing the whole damn forest on your time charts: Forex Trading Times Chart

1. Always check two time frames higher than your own for confirmation of a trend. The higher time frame should act like an essential secondary indicator before you place a trade to make sure that the pattern holds up both on your time frame and the higher time frames. If you trade hour charts, check the day and week charts before pulling the trigger. Day chartists should check the week and month charts beforehand, and so forth.

2. Do not attempt to analyze more than three chart levels in any trade. This can lead to a great deal of over analysis that is completely unnecessary. Once you start delving into ridiculous complexities on technical analysis, you lose the benefit of self fulfilling crowd psychology because not every single trader is going to look at nine chart levels before trading. On top of that, you just over think the trade and lose the chance to grab what could actually be a very good opportunity. Forex Trading Times Chart