Multiple Time Frames

To the uninitiated, the movements in stock market look like a snake slithering through grass or a feather floating in the windy air. Goes this way and that way sometimes up then down then sideways and so on. Quite unpredictable! It is these movements which make many economists call markets totally random and unpredictable. This happens due to different kind of players in the market- long term investors, traders, speculators, hedgers etc. Also each player keeps changing his views on the market too. Thus all the randomness of millions starts showing in the market movements.

Is then the market unpredictable and totally random?

It is unpredictable certainly, but is it totally random?

After studying the markets for a long time and trying out one realizes that the markets are random no doubt but random with a trend.

Thus what looks random in a time frame may look to follow some tentative path in a higher time frame. As we saw in earlier chapter on technical analysis there will be patterns evolving across time frames which provide clues for taking action. These possible actions can statistically give a player advantage though the market is still not predictable with 100% certainty. Thus any analysis of the market must start by resolving the movements across different time frames to decipher the market message.

So let us do some loud thinking on this. How do I start : from a lower time frame to higher or the other way?

Simple logic tells us that we must start from a higher time frame to get a perspective of where the market stand. Thus we need to ensure we do not mistake the trees for the forest and get lost in trivialities while ignoring the big picture.