Multi-Time Frame Analysis (1).pdf

MULTI-TIME FRAME ANALYSIS ON EXCEL & ON METASTOCK EXPERT By Hitendra Vasudeo - hitendravasudeo.com

Objective of Multi-Time Frame analysis

Trade/Invest in Major Direction

Participate in lower degree once major direction established: Look for

signals in lower degree

Basic Filtration

1) Trend

2) Volume

3) Open Interest

4) Candle & CP/LC Ratio

5) Price Gain/Loss

6) Fresh Signal/ Fresh Trend

Advance Filtration

Motion and Strength

1) ADX

2) RS

Slope Concept

Rate of Change- Representing Slope

Rate of Change of ADX

Rate of Change of RS

Rate of Change of DRV

Levels- Pivot Levels (Wilder’s RTS)

Execution

Pre Market – Based on Pivots

Live Market:

Open/Close Strategy

Pivot Strategy

Trend

Trend identification based:

Subjective and Objective Analysis

We prefer Objective Analysis

Moving Average

Use Variable or Adaptive Moving Average

Moving Average: Variable

Exponential moving average

Automatically adjusts

Smoothing percentage

Volatility of the data series

Sensitivity-current data.

Volume

Volume breakout

Gain Volume over previous Day/Week/Month

Open Interest

Gain in OI preferred for Directional Trades along with the trend, rise in

price and rise in volume

Candle & CP/LC Ratio

Candle categorized in Positive, Negative and Indecisive

PC- Positive Candle- Close>open

NC- Negative Candle- Close<Open

Indecisive- Doji’s, Smaller Body, Larger Upper or Lower Shadow- Use CP/LC

Ratio

CP/LC Ratio

P- Positive- Close > (H+L+C)/3

N- Negative- Close < (H+L+C)/3

To be used in co-ordination with Trend, Volume, OI and Candle filtration

Price Gain/Loss

1 Day Price Gain or Loss

For Up Trend- Gain are considered

For Down Trend- Loss are considered

Fresh Signal/ Fresh Trend

Cross over Up of Close over Variable Moving Average- Fresh Signal for buy

Cross Over Down of Close below Variable Moving Average- Fresh Signal for Sell

Fresh Signal/ Fresh Trend

Cross over Up of Low over Variable Moving Average- Fresh Signal for buy

Cross Over Down of High below Variable Moving Average- Fresh Signal for Sell

Advance Filtration

Motion and Strength

ADX

ADX > 20 along with UP Trend, Volume Increase, OI Increased,

Positive Candle, Positive-CP/LC Ratio for Up Trend/Buy Sorting

Motion and Strength

ADX

ADX < 20 helps to identify sideways movement or sluggish movement along with the Variable Moving

Average which turn flat or horizontal

Sharing of VMA by high and low considered Sideways

Motion and Strength

RS- Strength or Relative Strength (Not RSI)

Stock Price/Nifty or SENSEX= RCS

Motion and Strength

Stock Price/Nifty or SENSEX or any benchmark= RCS=RS

0-100 rating is required

We use RSI of RCS

Difference is normal RSI has close considered where we consider ratio RCS

Motion and Strength

Strength Increases: Stock Price increases faster than Benchmark

Stock Price steady and Benchmark falls

Stock Price falls less and Benchmark falls faster

Motion and Strength

Strength Decreases: Stock Price falls faster than Benchmark

Stock Price steady and Benchmark rises

Stock Price rises slower than Benchmark

Motion and Strength

RCS of RSI for 7 trading days

RCS of RSI for 7 weeks

RCS of RSI for 7 months

Rate of Change- Representing Slope

Rate of Change of ADX

In all up trend and down trend sorting slope of ADX showing be rising on day to day basis

Rate of Change- Representing Slope

Rate of Change of RS

Strength Should be rising in Up Trend

Strength Should be falling in Down Trend

Rate of Change- Representing Slope

Rate of Change of DRV

The variable moving average- DRV should be rising on day to day basis for up trend sorting

The variable moving average- DRV should be falling on day to day basis for down trend sorting

Levels- Pivot Levels (Wilder’s RTS) For Up Trend- Resistance or Book

Profit- L3-L4: Buy- CP- L2

For Down Trend- Support or Book Profit- L2-L1: Sell- CP- L2

Execution

Pre Market – Based on Pivots

For Up Trend Sorting:

Last C, CP, L2 = Buy

SL= Stop Loss- Previous Day Low

L3-L4= Book profits for the day

To Carry= Close > DRV

Execution

Pre Market – Based on Pivots

For Down Trend Sorting:

Last C, CP, L3 = Sell

SL= Stop Loss- Previous Day High

L2-L1= Book profits for the day

To Carry= Close < DRV

Execution

Live Market:

Open/Close Strategy

Intra-day up trend= Price >Open

Intra-day down trend= Price <open

Execution

Live Market: Open/Close Strategy

On Pre Market Defined Buy- In Good Market condition opportunities missed

because of gap up opening and further rise

Execution

Live Market: Open/Close Strategy

In such situation open/close strategy helps to revised stop loss

Price > Open and Price > P.Close =Buy

Stop loss= L or P.Close whichever is lower

Execution

Live Market: Open/Close Strategy

On Pre Market Defined Sell- In Weak Market condition opportunities missed because of gap down opening and

further slide

Execution

Live Market: Open/Close Strategy

In such situation open/close strategy helps to revised stop loss

Price < Open and Price < P.Close = Sell

Stop loss= H or P.Close whichever is higher

Execution

Live Market: Open/Close Strategy

Live Market: Pivot Strategy

Both can be opposite

If Pre Market defined Strategy is to Buy= Look for intra-day Strategy to

support the buy

Execution

Live Market: Open/Close Strategy

Live Market: Pivot Strategy

Both can be opposite

If Pre Market defined Strategy is to Sell= Look for intra-day Strategy to

support the Sell

Execution

Live Market: Pivot Strategy

Objective is to Sell High and Buy Low

Execution

Live Market: Pivot Strategy

Open/Close = Buy Later Pivot Strategy= Sell = Take profit on long

Open/Close= Sell Later Pivot Strategy=Buy= Take profit on short

RISK MANAGEMENT

Know the Risk Associated with Pre Market Buy or Sell

If risk is higher then avoid can pick with lower Risk in order of Preference

Final Pick for Buy or Sell

RS- Relative Strength which defined the order of preference

Along with

Risk Management

Multi Time Frame Analysis

Ideally all time frame= Daily, Weekly and Monthly to be Up for selecting a

buy

Or

One Higher up Degree to be in Up Trend

Multi Time Frame Analysis

If Monthly Trend is Up then look for fresh Buy Signal in Weekly

Further if weekly trend is up then look for fresh Buy Signal in Daily

Avoid Sell when up trends are defined and wait for next buy opportunity

Example= Aurobindo Pharma

Multi Time Frame Analysis

If Monthly Trend is Down then look for fresh Sell Signal in Weekly

Further if weekly trend is down then look for fresh Sell Signal in Daily

Avoid Buy when down trends are defined and wait for next Sell

opportunity

Multi Time Frame Analysis

Buy/Sell and Hold position in futures can be made easy by doing multi

frame approach

Earning in futures trading can be made easy

Technical Analysis is easier to implement in Trended market

Therefore, a methodical approach like Multi Time Frame to reduce the

risk of getting chopped in lower degree trend

Thank you

For

Being Patient

Hitendra Vasudeo

Stockmehanics.com

Hitendravasudeo.com