Using Multiple Time Frames for Futures Trading

Your system will perform better if it is optimized or designed to produce entry signals in tandem with the bias of longer time-frames. Keep in mind that longer time-frames provide more powerful, reliable direction than do shorter time-frames. That said, we want to make entries that are in agreement or in similar direction with the direction stipulated by longer time-frames.

For example, if you are inclined to trade on information derived from daily bar or price information, then we advise that you enter trades in the direction of the time-frame that is at least one time-frame greater than the one in which you are analyzing.

For a system using daily time-frame entry points, we recommend you use a weekly time-frame to define overall directional bias. If the weekly time-frame is bullish (per your system), then only take buy entries, on a daily basis. The opposite is true for sell entries – only enter short on a daily basis if the weekly time-frame is bearish.