How To Improve Day Trading Entries (Timeframe Alignment)

Summary

This video script delves into the concept of multiple time frame analysis in trading, which significantly enhances the probability of successful trades. The speaker emphasizes the importance of aligning multiple time frames to identify trends and momentum, akin to betting on the winning team in a basketball game's final moments. They discuss using moving averages to quickly gauge trends and highlight the significance of waiting for time frame alignment before entering trades. The script provides practical examples of how to apply this strategy for both intraday and swing trades, illustrating how it can help traders avoid unnecessary risks and manage their trades more effectively.

Takeaways

• 📈 Multiple Time Frame Analysis is a trading technique that involves analyzing charts on more than one time frame to increase the probability of successful trades.
• 🔍 Before entering a trade, the speaker checks both higher and lower time frames to ensure there's no conflict that could affect the trade negatively.
• 🌟 The concept of 'time frame alignment' is crucial; the speaker looks for multiple time frames to all indicate the same directional bias for a stronger trade setup.
• 🏊‍♂️ A common saying in trading is 'it's easier to swim with the current than against it,' which translates to trading with the trend rather than against it.
• 📊 The speaker uses specific time frames for intraday trading (1, 2, 5, 15-minute, and hourly) and larger time frames (daily, weekly, monthly) for analyzing stocks.
• 🛠 The speaker relies on moving averages, particularly the 20-period and 200-period moving averages, to identify trends and time entries.
• ⏰ Patience is key; the speaker waits for a secondary entry when time frames align, which can provide a better momentum and increase the chances of a successful trade.
• 📉 The speaker avoids trades where there's a conflict between time frames, as it can lead to a 'tug of war' that may result in unnecessary losses.
• ⏫ Time frame alignment aids in trade management by providing early signals if the trade starts to fail, allowing for better decision-making on when to exit or adjust positions.
• 🚫 Despite time frame alignment, there are no guarantees in trading, and the speaker acknowledges that some trades may not work out even with a well-aligned setup.

Q & A

What is the main concept discussed in the video script?

The main concept discussed is 'multiple time frame analysis' in trading, which involves analyzing charts on more than one time frame to increase the probability of successful trades.

Why is multiple time frame analysis important in trading?

Multiple time frame analysis is important because it helps align trades with the momentum of the market, making it easier to 'swim with the current' rather than against it, thus increasing the likelihood of a profitable trade.

What does the speaker mean by 'time frame alignment'?

The speaker refers to 'time frame alignment' as the situation where multiple time frames all indicate the same directional bias, which provides more confirmation and momentum for a trade in that direction.

Which time frames does the speaker typically use for intraday trading?

The speaker uses the 1-minute, 2-minute, 5-minute, 15-minute, and hourly time frames for intraday trading.

How does the speaker use moving averages in their trading strategy?

The speaker uses the 20-period moving average (blue line) to quickly identify the trend direction and the 200-period moving average (orange line) for broader trend analysis. An uptrend is indicated when the 20-period moving average is moving upwards with candles trading above it, and a downtrend is indicated when the 20-period moving average is moving downwards with candles trading below it.

What is the significance of the 20-period moving average in the speaker's strategy?

The 20-period moving average is significant because it helps the speaker to quickly determine the current trend direction, which in turn influences the type of trading setups they look for and the timing of their entries.

Why does the speaker wait for a secondary entry in some cases?

The speaker waits for a secondary entry when there is a conflict between time frames, allowing the market to resolve the conflict and achieve time frame alignment before entering a trade, which can provide a better risk-reward setup.

How does time frame alignment help with trade management?

Time frame alignment helps with trade management by providing early signals of a trade's potential failure, allowing the trader to adjust their stop losses and manage their positions more effectively.

What does the speaker mean when they say 'let Mommy and Daddy fight it out'?

This is a metaphorical expression used by the speaker to describe waiting for conflicting time frames to resolve their differences before making a trade, ensuring that the trader enters a trade only when there is agreement among the time frames in the desired direction.

Why might the speaker pass on a trade even if there is a buy setup on a certain time frame?

The speaker might pass on a trade if there is a buy setup on a certain time frame but the lower time frame is in a conflicting downtrend, as this could indicate a tug of war between the time frames, leading to a higher risk of loss.

Outlines

00:00

📈 Multiple Time Frame Analysis in Trading

The speaker discusses the concept of multiple time frame analysis, which significantly improved their trading by increasing the probability of successful trades. They liken it to betting on the winning team in a basketball game's fourth quarter, emphasizing the importance of momentum. The speaker explains that this analysis involves looking at charts on more than one time frame to identify potential conflicts that could affect a trade. They focus on the idea of time frame alignment, where multiple charts should indicate the same direction for a stronger momentum. The speaker uses moving averages as indicators, with the 20-period moving average (blue line) helping to identify the trend direction. They provide examples of how waiting for time frame alignment can lead to better trading entries and how it can assist with trade management by providing early signals of a trade's potential failure.

05:00

🔄 Waiting for Time Frame Alignment

In this paragraph, the speaker further elaborates on the strategy of waiting for time frame alignment before entering a trade. They explain that even if a buy setup looks promising on a 15-minute chart, they will pass on the trade if the 5-minute chart indicates a conflicting downtrend. The speaker prefers to wait for a secondary entry that aligns with the direction they want to trade, which provides better momentum and reduces the risk of getting caught in a tug of war between conflicting time frames. They also mention that this approach helps with trade management, allowing for more informed decisions on whether to exit a trade early if the time frames start to show a downtrend. The speaker concludes by emphasizing the simplicity and effectiveness of this strategy, which has become an integral part of their trading approach.

Keywords

💡Multiple Time Frame Analysis

Multiple Time Frame Analysis is a trading strategy that involves examining and analyzing financial instruments across various time frames. It is a key concept in the video, as it is what the speaker credits for taking their trading to the next level. By looking at different time frames, traders can gain a more comprehensive view of market trends and potential conflicts that might affect their trades. In the script, the speaker uses this analysis to decide whether to enter a trade, ensuring that the direction of the price movement on one time frame is supported by other time frames.

💡Probability of Trades

The 'probability of trades' refers to the likelihood that a trade will be successful. The speaker in the video is focused on increasing this probability by using multiple time frame analysis. By aligning different time frames in the direction they wish to trade, they believe they can stack the odds in their favor, similar to betting on the winning team in a sports game. This concept is central to the video's message about improving trading decisions.

💡Momentum

Momentum in trading refers to the strength or velocity of a current price movement. The speaker uses the term to describe the increased likelihood of a trade's success when multiple time frames are aligned in the same direction. It implies a force that carries the price in a particular direction, making it easier to 'ride the wave' of the market. The video emphasizes the importance of aligning with this momentum rather than fighting against it.

💡Support and Resistance

Support and resistance are fundamental concepts in technical analysis. Support is a price level where an asset's price tends to find a floor, while resistance is a price level where the price tends to encounter a ceiling. In the video, the speaker mentions these as aspects of multiple time frame analysis, suggesting that understanding where these levels are across different time frames can help in making informed trading decisions.

💡Time Frame Alignment

Time Frame Alignment is a strategy where a trader looks for harmony across different time frames before entering a trade. The speaker in the video emphasizes the importance of having multiple charts showing the same directional bias to increase the trade's chances of success. It is a core theme of the video, where the speaker illustrates how waiting for alignment can provide a more favorable entry point.

💡Moving Averages

Moving averages are a widely used indicator in technical analysis that helps to smooth out price data and highlight trends. In the video, the speaker uses a 20-period moving average (blue line) and a 200-period moving average (orange line) to quickly identify the trend direction. The moving averages are instrumental in determining whether the market is in an uptrend or downtrend, which in turn influences the type of trading setups the speaker looks for.

💡Intraday Time Frames

Intraday Time Frames refer to the short-term time frames used by traders to make decisions within a single trading day. The speaker mentions using the one, two, five, and fifteen-minute charts for intraday trading. These time frames are crucial for day traders who need to make quick decisions based on short-term market movements.

💡Swing Trades

Swing trades are trades that are held for several days to several weeks, aiming to capture significant price movements. The video speaker discusses how they use different time frames for swing trades, such as the hourly, daily, weekly, and monthly charts, to ensure alignment before entering a position. This approach helps in managing risk and increasing the probability of success.

💡Trade Management

Trade management is the process of overseeing and adjusting open trades to maximize profits and minimize losses. In the context of the video, the speaker uses time frame alignment to improve trade management by providing early signals of a trade's potential failure. This allows for better decision-making on whether to hold, exit, or adjust the position based on the evolving market conditions across different time frames.

💡Secondary Entry

A secondary entry in trading refers to an opportunity to enter a trade after the initial signal has passed, often after a pause or retracement in the market. The speaker in the video waits for a secondary entry when time frames are aligned, which can provide a more favorable risk-reward setup. This strategy is highlighted as a way to avoid getting caught in conflicting market movements and to increase the chances of a successful trade.

Highlights

Multiple time frame analysis is key to increasing the probability of successful trades.

It's like betting on the winning team in the fourth quarter of a basketball game, with momentum on your side.

Multiple time frame analysis involves looking at and analyzing charts on more than one time frame.

Checking lower and higher time frames can reveal conflicts that may affect trade performance.

Time frame alignment is crucial; it means multiple charts should all indicate the same direction for a strong trade setup.

The saying 'it's easier to swim with the current than against it' applies to trading with the trend.

The speaker uses one, two, five, fifteen-minute, and hourly charts for intraday trading, and daily, weekly, and monthly for larger time frames.

For day trades, alignment of one, two, five, and fifteen-minute charts is preferred, and for swing trades, hourly, daily, weekly, and monthly.

Only moving averages are used as indicators, with the 20-period moving average indicating the trend direction.

A buy setup on a 15-minute chart is checked against the five-minute chart for time frame alignment.

Waiting for a secondary entry with time frame alignment can provide a better momentum for the trade.

Time frame alignment helps in trade management, allowing for early signals of a failing trade and the opportunity to cut losses.

Even with time frame alignment, there are no guarantees in trading, as markets can be unpredictable.

The speaker emphasizes the importance of always checking multiple time frames before trading.

The concept of time frame alignment is simple yet powerful, and it has become an integral part of the speaker's trading strategy.

The speaker invites viewers to like, comment, and subscribe for more content, highlighting the interactive nature of the trading community.

Transcripts

so recently I had a great discussion

about how I use multiple time frame

analysis in my trading and I thought I'd

share some of it here too because this

concept is what took my trading to that

next level and it immediately helped

increase the probability of my trades

following through it almost feels like I

have the power to bet on the winning

team in like a fourth quarter of a

basketball game because I'm just getting

much more momentum on my side to where

price is heading now that doesn't

necessarily mean it's a guaranteed win

because we all saw Tracy McGrady hit 13

points in the last 33 seconds to win the

game so anything can happen especially

with trading but increasing the

probability is what I'm looking for so

what is multiple time frame analysis it

is looking at and analyzing charts on

more than one time frame so let's say I

come across a stock I'm looking to trade

and it has a pretty buy set of pattern

off of whatever time frame I'm looking

at but before I do anything else I ask

myself what is the lower and higher time

frames also doing because even though

it's a buy setup and looking higher on

this time frame it may also be setting

up a cell setup and looking lower on

another time frame so there may be some

conflict there that may cause my trade

to struggle if I were to get into it now

there's many aspects to analyzing

multiple time frames like finding

support and resistance trade management

determining your targets but what I want

to focus on in this video is looking for

time frame alignment meaning if I want

to play something long I want not just

one chart but multiple charts to all

look higher I want to see them all

aligned with the direction I want to

play because when I get multiple time

frame alignment there's much more

momentum in that direction there's more

confirmation there's a common saying

it's easier to swim with the current

than against it which means it's easier

to trade with the trend than against it

so when I have not just one but multiple

currents all pushing into One Direction

it just makes it that much stronger when

you think about it it seems like such a

simple and effective concept but it's

something that is often overlooked so

then the next question is what time

frames do I look at if you watched any

of my live training videos you know I

use the one two five fifteen minute and

the hourly for my intraday time frames

but I also have the daily weekly monthly

for my larger time frames so anytime I

pull up a stock those are the only eight

time frames I'm looking at and analyzing

before I take any trades now I'm not

looking for alignment on all eight of

them but for my day trades I like to see

the one two five fifteen minute aligned

and for my swing trades the hourly daily

weekly and monthly aligned so let's get

into some real examples so first notice

on my charts that the only indicators I

use is the moving averages the blue line

is the 20 period moving average and the

orange line is the 200 I'll definitely

make an in-depth video on how I use them

but one of the ways I use the 20ma is to

quickly identify the trend if the blue

line is moving upwards with candles

trading above it it's in an uptrend

which is when I focus on buying

opportunities and if the blue line is

moving downwards with candles trading

under it it's on a downtrend where I

focus on shorting opportunities it helps

to know what setups I look for which

I'll link on the screen right now if you

want to check it out so here I have a

buy setup of the 15 minute I see a nice

pop from this morning with a clean

pullback into the rising 20ma which I

also use to time my entries but before I

jump into this trade I want to check on

my other time frames to make sure that

they're aligned with the direction I

want to play which in this case is for

the price to move higher again I use the

one two five fifteen minute for my

intraday also have the hourly on there

but let's focus on these for now and

have a look so usually I just need to

look at the one time frame lower because

if that is aligned it will mean even the

smaller time frames under that should be

aligned as well or if it's not then

there's no trade for me anyway yet at

least so for that reason and also to

make it easier to follow along let's

focus on the time frame I'm trading and

the one time frame underneath that in

this case we can see that the one time

frame lower the five minute is actually

in a downtrend right the 20ma pointing

down with candles trading under it so we

do not have time frame alignment and no

matter how clean this 15 minute buy

setup is there's going to be a bit of a

fight coming from the five minute

downtrend and that's a problem for me

because if I get triggered in on this

buy setup and the five minute downtrend

decides to follow through and continue

then I'm going to take a loss now that

doesn't mean I should completely pass on

this trade it just means it's not ready

yet so what I like to wait for is to see

if that five minute downtrend fails so I

let that first meta buy setup go and now

I see that the five minute is ending the

downtrend and transitioning into an

uptrend the 20ma is starting to curl up

with the candles trading and holding

above it and I can see that the momentum

is Shifting to the upside so by just

waiting for that secondary entry tree

waiting for my time frames to get

aligned gives me an entry with better

momentum in the direction I'm trading

and off it goes here's another 15 minute

buy setup but before I do anything let's

take a look at the one time frame blower

on the five minute and it looks like we

have the same situation here I see that

we have a declining 20 with candles

trading under it so again I'm gonna pass

on this initial buy setup because if it

triggers I don't want to sit through

this tug of war that's going to happen

between these two time frames and make

me sweat through this trade before it

decides which direction it wants to go

I'd rather just wait for more

confirmation skip through this chop and

see if that five minute downtrend can

fix itself first and get in on this

secondary entry when I have time frame

alignment on my side and look at the

move it makes once we have time frame

alignment now sometimes they don't give

a secondary entry and just work right

away and go without me which I'm okay

with because a lot of times they don't

work either so if we look here on this

15 minute cell setup that's triggering

while the five minute is on an uptrend

this time the five minute is the

dominant one and continues to move

higher which would have stopped me out

so this keeps me out of trouble and

avoids unnecessary chop pests it also

helps with my management if I decide to

do this 15 minute buy setup while the 5

minute is in Conflict I can't do

anything but leave my stop at the pivot

and hope that the five minute fails the

downtrend whereas if I wait for another

entry where my time frame is aligned I

have a better idea if the trade doesn't

look good anymore I can get early

signals of the trade failing and can

raise my stop and cut my losses by

noticing if the other time frames start

to go on the downtrend again keep in

mind just because we have time frame

alignment doesn't guarantee it'll work

right let's look at one more here's a 15

minute cell setup with the 5 minute

being a bit too strong and turning into

an uptrend so I'm going to wait and let

it go and now I see a buy setup has

formed and triggered on the smaller time

frame so actually now I don't even

really need to wait for this to turn

into a downtrend I can actually put my

order in under this tail because if it

triggers it means that the five minute

buy setup failed and will turn into a

downtrend giving me the time frame

alignment in this case it took a bit of

time before triggering also given a one

two three but look at how trades tend to

flow in its direction a lot better when

I have time frame alignment so hope this

is making sense it's such a simple and

Powerful tool to have in my trading it's

engraved in me now to always check

multiple time frames if I see conflict I

let Mommy and Daddy fight it out until

they are in agreement in harmony with

the direction I want to trade and go

from there alright if you found this to

be helpful all I ask is that you take a

second of your time to like the video

leave a comment feel free to ask

questions subscribe if you want more

content like this one as always I

appreciate you for being here and I hope

to see you on the next one

[Music]

[Applause]