Hello! This is SAKU!

Last time, as the beginning of MTF analysis,the fractal nature of the marketwas discussed, and this time we will continue talking about MTf analysis!

The market sometimes shows similar price movements even when you enlarge a part of it; this self-similarity is called a fractal structure.

This time, to use the market’s fractal nature in analysis by dividing it into multiple timeframes, let’s look at the roles of each timeframe.

The Roles of Timeframes in MTF Analysis

In my MTf analysis,upper timeframe, main timeframe, lower timeframeare basically used as three timeframes (sometimes more).

Let’s look at each role.

・Upper timeframe

Upper timeframehasthe role of grasping the overall flow.

It’s about confirming the market’s rough trend and conditions to understand the big picture.

・Main timeframe

The term “main timeframe”isused to mean the timeframe you are currently focusing on..

First,after deciding the main timeframe, the higher and lower timeframes are determined relatively.

For example, if you make the 1-hour chart the main timeframe, then 4-hour and higher are upper timeframes, and 30-minute and shorter are lower timeframes.

The role of this main timeframe is to conduct trades with this timeframe as the axis (main).

More specifically, to check setups and to look at triggers.

・Lower timeframe

Lower timeframehas the role of,when the main timeframe’s setup is in place, looking at more detailed price movements to consider entriesfor.

In other words, in my case I don’t look at the lower timeframe unless the main timeframe’s setup is in place.

If you were to illustrate the roles of timeframes…

Try to compare to a car drive

Let’s compare each role to a car drive.

Check the destination with the navigation or map. It’s northward. (Grasping the overall picture on the upper timeframe)

→ To get to the destination, I should drive north in this lane for a while. For now, drive up close. (Grasping the route with the main timeframe)

→ Navigation: “Around the destination.”
If I go straight a little longer and turn right at the next convenience store, I’ll reach the destination (grasping a detailed route with the lower timeframe)

That’s how it goes.

If you can’t see the overall map from your current location to the destination, you won’t know which direction to head.

And you also need to confirm which numbered road or lane you should take to get there.

Even when you’re nearby, you must look for landmarks or turns to reach the destination.

I said I don’t look at the lower timeframe until the setup is in place, but in the driving analogy,looking for near-destination details too early when the destination isn’t near yet isn’t very meaningful.

But once the destination (entry point) is near, it’s better to specifically check which corner to turn (lower timeframe status).

Therefore, only when the entry environment is prepared do I drop to the lower timeframe to actually decide entries.

Try to compare to fishing

Now, let’s compare to fishing.

Check wave height and wind direction. It’s near high tide and the wind is calm. (Grasping the environment on the upper timeframe)

→ I found a promising fishing spot. I’ll cast the line and wait until I get a good bite. (Watch the situation with the main timeframe)

→ It’s coming! It bites! I’ll set the hook and reel it in! (Entry with the lower timeframe)

That’s how it goes.

If you cast your line in a place where there are no fish or it doesn’t look promising, you won’t catch anything, right?

Also, even if a fish bites, if you’re clumsy with the strike or the reel, the fish may slip away.

Even in a place where there are fish, repeatedly casting the line means wasted bait.

People infected with the option-positioning delusion tend to cast and reel without properly confirming whether there are fish (a promising point), and that becomes their goal of fishing?“Feeling of fishing”.

Continuing to cast in places with no fish or unsuitable spots only wastes bait and line.Right.

Which timeframes should you use for each?

Setting the timeframes

You may wonder which upper, main, and lower timeframes are best.

This depends on your trading style, but for the main and lower timeframes, it’s good to view from the main timeframe one or more additional timeframes.

First, find a main timeframe that fits your trading style!

From my sense, for Swing trading:

・When the daily chart is the main timeframe
Upper timeframe → weekly, lower timeframe → 4-hour chart
・When the 4-hour chart is the main timeframe
Upper timeframe → daily, lower timeframe → 30-minute chart
・When the 1-hour chart is the main timeframe
Upper timeframe → 4-hour or daily, lower timeframe → 15-minute chart

For Day Trading, it’s about

・When the 30-minute chart is the main timeframe
Upper timeframe → 4-hour, lower timeframe → 15-minute
・When the 15-minute chart is the main timeframe
Upper timeframe → 1-hour, lower timeframe → 5-minute

That’s roughly the idea.

Of course, depending on market conditions, some waveforms are easier or harder to recognize, so this is not a hard rule, but it’s generally like this.

Be careful of the mismatch between target price range and timeframe!

However, when looking at higher or lower timeframes,you should be careful not to stray too far from your main timeframe, or your viewpoint may get lost.

For example, if your main timeframe is 5 minutes but you look at weekly or monthly timeframes, the time gaps are too wide and you may become even more confused.

Also,be careful of the mismatch between target price range and timeframe.

In fishing terms, scalping targets many small fish, day trading targets mid-sized fish, and swing targets large fish.

You must choose the rod, bait, and sea depth suitable for the prey you intend to catch.