The recent advancement in technology has made trading a lot more easily. People who have the basic foundation of the Forex market are making a profit by using the advanced EAs that can automatically draw the support and resistance level. But finding the key levels and learning to execute the trade is not enough. You need to secure your profit by improving your execution accuracy. Most of the time, it will be hard to filter out the false trade signals, but with the help of multiple time frame analysis, you can easily improve your trade execution process.
So, what is multiple time frame analysis?
Multiple time frame analysis is the process by which traders find the quality of the trade setups by analyzing different time frame data. To make things easier, let’s consider a bearish monthly candle. So, if you switch to the lower time frame, you will find many bullish and bearish candle building up the monthly candles.
Switching to a different time frame to find a reliable trade setup is a very tough task. In fact, it requires extreme knowledge of skills. But if you learn to use the forex EA you can easily simplify the process. But for that, you need to rely on specific types of EAs that can give you accurate rest. Let’s find out about the functions of important EAs that can help you in multiple time frame analysis.
Eliminating time frame switch problem.
With the help of EAs, you can eliminate the problem associated with the switching time frame. Most of the time, it becomes really hard for retail traders to keep track of different time frame data. You can easily solve this problem by designing a unique EA that can show the different time frame data in the same window. Though there are 9 major time frame available in the MT4 trading platform, you need to focus on the most important ones. These are –
- 1 hour
- 4 hour
- Daily
- Weekly
During the development process of your EA, make sure these 4 different time frame charts are showing the same working space so that you don’t have to switch to different time frames. Just with the help of this tool, you can significantly improve your analytical ability. But when you analyze the different time frame window at the same workspace, make sure you give priority to higher time frame data. Relying on the lower time frame data significantly increases the risk.
Find the direction of the trend
At times, it becomes really hard to find the direction of the major trend. But with the help of EAs, you can easily find the direction of the trend in the different time frames. You don’t have to analyze the different time frame data or draw individual trend lines in different time frames.
The EA will calculate the opening and closing price and based on the market volatility, it can easily give you a clear clue about the direction of the market movement. But make sure all the readings are displayed in the same working space so that you don’t have to switch to a different time frame.
Creating a dynamic price alert
EAs are one of the most advanced tools that can automate your trading process. When it comes to multiple time frame analysis things become really hard since the traders have to rely on the different price levels. In fact, it becomes a very hectic task to process such a large number of data in the multiple time frame analysis. But if you use a smart EA, you can create price alerts in the different time frames with a custom note. As soon as the price hits the specific level, you will get a push notification which will eventually help you to execute the trades at the best possible price.
Some of you might say, you can do the same task by using the pending orders. But this has nothing to do with the pending entry. The EAs will monitor the price movement in the different time frame and when it reaches a certain condition it will create an alert so that you can manually assess the market condition and execute the trade.
Conclusion
The use of EAs in multiple time frame analysis is huge. You can program the EA to analyze different time frame data based on different conditions. As soon as the conditions are filled the EA will notify you. In the past, traders needed multiple monitors only to analyze one single currency pair. But with the help of multiple time frame analysis and smart EA, you can do all the complex tasks with a simple laptop.
Make sure you never become fully dependent on the EAs as it can ruin your performance in the long run. At times, forget about the EAs and use manual multiple time frame analysis.
