#574: What to Do When Timeframes Disagree in Forex

What to Do When Timeframes Disagree in Forex

Podcast:

Find out more about Blueberry Markets – Click Here Find out more about my Online Video Forex Course Book a Call with Andrew or one of his team now Click Here to Watch Prop Firm Masterclass #574: What to Do When Timeframes Disagree in Forex

In this video:
00:31 – Confusion on the charts.
01:13 – The longer time frame charts are generally more reliable.
01:44 – How I’d approach this scenario.  
04:03 – High Reward:Risk trading.
05:20 – 17 minutes Masterclass and Book a Call.
05:44 – Blueberry Markets as a Forex Broker.
06:07 – Comments, Like & Subscribe.

What do you do when you see this scenario happening on your charts? You’re looking at the same pair, but on two different time frame charts, and you’re seeing two signals but in opposite directions. It’s a common issue. We have a simple solution for you. Let’s talk about that and more right back.

Hey there. Traders! It’s Andrew Mitchem here at The Forex Trading Coach with video on podcast number 574.

Confusion on the charts.

A common scenario that causes a lot of issues. You’re on the EUR/USD. You’re on the daily time frame and you see a fantastic buy trade setting up. And you’re thinking fantastic. Let’s take a trade on this. Moving the market upwards in a bullish buy direction.

With the euro looking strong us looking weak. The issue is that you just taken that trade and you then scan through different time frame charts. And at the same time you’re seeing on the one hour chart the EUR/USD falling and it causes confusion. What do you do in that scenario? Do you take both positions? Do you take neither?

You get confused. Do you get stopped out on both? What should you do.

The longer time frame charts are generally more reliable.

So, simple solution for you is this. In general, the longer time frame charts are more accurate. In general, they should be more reliable. They offer in general, high reward to risk trades, and they are better to take because they have more data contained in within them.

And you can allow for fluctuations in market movements because you stop losses is likely to be bigger. But of course your profit target is going to be bigger. Your reward to risk is still similar, but probably better to your one hour time frame chart.

How I’d approach this scenario.  

And so what I like to do is I would certainly be taking that buy trade on the daily time frame, because that’s where my bread and butter trading comes from.

However, the way that we trade is that we don’t just say we’re taking it buy trade on that daily time frame. We look for retracements within the market, so unexpecting at some stage within that day. For the EUR/USD to fall. And that could be the exact scenario that you’re seeing at that time. But on the shorter timeframe chart where we see our sell opportunity on the one hour chart.

So on the daily timeframe, yes. Overall, I’m expecting within the next day or so for the market to move up. But I’m realistic and I’m expecting that potentially we should see a pullback or a retracement first. So when you go to your shorter time frame chart, it’s like you one, two, three, four hour charts. You may well see a sell trade and see the market pull back.

Now two scenarios there. You could look at that and go well longer time. I’m seeing the market moving up. I’m ignoring that shorter time frame sell opportunity. Or you can say, well I can see that sell opportunity because it’s on a short timeframe. Realistically my stop loss or my profit target a lot smaller. Again, the ratios are very similar, but there are lots more in terms of size.

So what you can do is take that sell trade at the same time, and you can profit from that small pullback on the shorter timeframe chart, whether it’s one, two, 3 or 4 hour chart let’s say. You can profit on that sell trade at the same time as that moves down, you’re probably going to find on your daily chart your limit order buy limit orders probably being filled by now.

And you take that sell trade on the short timeframe chart. You hit profit on that and then at the same time, bigger picture, your limit order gets filled on your daily chart, and then the market changes and moves up into your anticipated direction. That’s a fantastic scenario. When you see that happen, because you’ve got the same pair, two different trades in opposite directions, both becoming profitable.

And that’s the key to understanding what’s happening in the market and knowing when to enter, where to put your stop losses and your profit targets to ensure that both trades become profitable and you get good rewards to risk out of both trades.

High Reward:Risk trading.

Now let’s say one was profitable and the other wasn’t. With the way that we trade, let’s say we have a 3 to 1 reward to risk on our trades.

And let’s say it doesn’t really matter which one works and which one doesn’t. But let’s say the one hour chart worked and the daily didn’t. Let’s say on our one hour chart, we make a 3 to 1 reward to risk on our daily, we lose our, set risk of, let’s say, half of 1%. So we make 1.5%.

We lose half percent. If the scenarios have changed and our one hour short timeframe chart gets stopped, that we lose half percent. But our daily bigger picture by trade works and hits the profit target. We make 1.5% or 3 to 1, so we’re still net positive even with a 50% win rate. Of course, the ideal scenario sell trade works.

We make a 1.5% gain the buy trade on the daily works, we make another 1.5% gain. Fantastic results. 3% from two trades on the same market at the same time in opposite directions. And that’s what often happens when you have a strategy in place with reward to risk that you know and understand, and a strategy that is proven across all timeframe charts or markets and over such a long period of time. And that’s what we can help you with.

17 minutes Masterclass and Book a Call.

If you’d like to know more. Have a look at my free masterclass. If you have been on that already and you’d like to book a call with us, then you can do that as well. And I’ll put a link to both of those on this video and podcast page here, so you can follow along and jump on to the masterclass, or book a call and have a chat to see if we’re a good fit and say if what we do is something that’s going to work for you.

Blueberry Markets as a Forex Broker.

If you’re out there looking for a very good broker, I can highly recommend Blueberry Markets. They are fantastic broker. I’ve been with them for years and years, as have hundreds if not thousands of our clients and other people who I suggest have a look at blueberry markets, good people, good spreads, lots of markets available, and more and more markets coming on board now, especially on their MT5 platform. And I can highly recommend them.

Comments, Like & Subscribe.

If you have any questions or topics you’d like me to discuss as we head into this year, to help you with your trading in 2025 and beyond this, send me an email or leave a comment here, and I’ll be glad to help you and to discuss topics that you’re having issues with to help make you a successful trader.

This is Andrew Mitchem at the Forex Trading Coach. I see this time next week. Bye for now.

Episode Title: #574: What to Do When Timeframes Disagree in Forex Find out more about Blueberry Markets – Click Here Find out more about my Online Video Forex Course Book a Call with Andrew or one of his team now Click Here to Watch Prop Firm Masterclass