Multiple Time-Frame Analysis

Multiple time-frames analysis equals using 2 chart time-frames to trade crude oil trading - a shorter one used for trading & a longer one to check Oil Trading trend.

Since it's always good to follow the market trend, in Multiple Time Frame Analysis, the longer time-frame gives us the direction of the long-term trend.

If the long-term market direction supports the direction of the smaller chart time-frame then the probability of being profitable is greatly increased. This is because even if you make a mistake the long-term oil trend will eventually save you. Also if you trade with direction of the market, then mostly you'll be on the winning side, this is what this analysis is all about.

Remember there is a popular saying by many Oil Trading & stock market investors that says: "The oil trend is your friend" - never go against the oil market.

There are four different types of Oil traders - all these use different charts to trade as described below.

Examples of how each type of Oil trader uses multiple Crude Oil Trading time-frames analysis strategy:

Scalpers

This group holds on to their trades for only a few minutes. The scalper never holds on to a trade for more than ten minutes. With the objective of making small amounts of pips as profit, 5 - 20 pips.

A Scalper using 1 minute chart wants to go long, checks 5 min chart, which looks like the one below, since 5 minute show oil trend is going up, then decides from this analysis it's okay to buy.

Day Traders

This group holds on to their trades for a few hours but not more than a day. With the objective of making quite a number of pips, 30 to 100 pips.

Day trader trading 15 min chart wants to go long, checks 1 hour chart, which looks like the one below, since 1 hour shows market oil trend is going up, then decides from this analysis it's ok to buy

Swing Traders

This group holds on to their trades for a few days to a week. With the objective of making a large number of pips, 100 to 400 pips.

Swing trader using 1 hour chart wants to go short, checks 4 hour chart, which looks like the crude oil trading example explained below, since 4 hour shows the oil trend is going down, then decides from this analysis it's okay to sell.

Position traders

These are the investors that hold on to their trades for weeks or months. With the objective of making a large number of pips, 300 to 1000 pips.

Position trader using the daily trading chart wants to go short, checks the weekly chart, weekly looks like the one below, since weekly shows the oil trend is going down, then decides from this analysis it's okay to sell.

How to Define A Crude Oil Trading Trend

Using a oil trading system has 3 indicators - Moving Average Crossover System, RSI & MACD & uses simple rules to define the trend. The rules are:

Upwards trend

Both MAs Moving Up

RSI above 50

MACD Above Centerline

Downwards Oil Trading Trend

Both MAs Moving Down

RSI below 50

MACD Below Centerline

For More explanation about this system read: How to Generate Oil Trading Signals With a Oil Trading System.