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Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading by David Halsey

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CHAPTER 7

Using Multiple Time Frames to Trade

The strategies in this chapter will give us the tools to identify the path of least resistance. We will be exploring concepts that will allow a trader to identify trends and future prices of any market. We will review how to execute these opportunities when they arise and how to manage our trades once we are in them. Here, we open a road map that will allow us to predict future profit targets days, months, and years ahead of time.

Time Frames and Russian Dolls

In the previous chapter, we looked at four measured moves (MMs) in the real world and at how they evolved over time. What we didn't dwell on was the precise time frame particular to each chart; instead, we focused on the contours of motion exhibited in each. Before moving on to further investigation of the MM methodology, we need to lay some basic groundwork for considerations of time. Without an informed perspective on the multiple time frames over which market prices move, a trader's success will prove elusive at best.

Traders the world over use a wide variety of time frames as they trade the markets. Position traders typically use yearly, monthly, and weekly charts. Many Swing traders step it down a notch and use primarily monthly, weekly, and daily charts as their time horizons are often shorter than those utilized by position traders. Day traders tend to use charts of the shortest time increments—one-hour and 15-minute charts are very common among this group. But beyond ...

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