What are Time Frames?
In order to consistently make money in the markets, traders need to learn how to identify an underlying trend and trade around it accordingly. A time frame refers to the amount of time that a trend lasts for in a market, which can be identified and used by traders.
Example of Time Frames
Looking at the BTC (Bitcoin) chart on the Gemini Exchange on different time frames we can get a better grasp on where the price of Bitcoin is heading in the short-term and long-term. Pictured in this example are the 1-hour (top left), 4-hour (top right), daily (bottom left), and weekly (bottom right).
How to Trade on Multiple Time Frames
Advanced traders always do a top-down analysis and look at multiple time frames in order to get a good grasp of the market. A top-down analysis is where you start your technical analysis from the biggest time frame possible, whether it be monthly, quarterly, yearly, or per decade. From the initial biggest time frame, traders start to go to in order laddering down to the smallest time frame before entering their position. A trader that starts the top-down analysis on the monthly would then go to the weekly, daily, 12-hour, 4-hour, 2-hour, 1-hour, 30-minute, 15-minute, and 5-minute before making the day trade.