At the School of Pipsology, we like to use three time frames when analyzing the market.
This approach gives us flexibility to understand the long-term, medium-term, and short-term trends all at once.
Trading Using Three Time Frames
1. Identify the Main Trend
We use the largest time frame to spot the overall main trend — this gives us the big picture of the currency pair we want to trade.
For example, if on the daily chart EUR/USD is trading above the 200 SMA, that tells us the main trend is up.
2. Determine the Current Market Bias
The next smaller time frame helps us identify the medium-term bias — whether the market is generally bullish or bearish.
Looking at a 4-hour chart, for instance, we might see that EUR/USD maintains a bullish bias.
3. Find Entry and Exit Points
The smallest time frame reveals the short-term trend and helps pinpoint precise entry and exit points for trades.
Multiple Time Frame Combinations
You can pick any time frames you want, as long as there’s enough gap between them to observe distinct movement differences.
Some common sets include:
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1-minute, 5-minute, and 30-minute
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5-minute, 30-minute, and 4-hour
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15-minute, 1-hour, and 4-hour
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1-hour, 4-hour, and daily
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4-hour, daily, and weekly
When choosing your time frames, make sure the intervals are wide enough so the smaller time frame can move around without every move showing up immediately on the larger time frame.
If the time frames are too close, you won’t notice any real difference between them, which defeats the purpose.