Multi-Time Frame Analysis (1).pdf
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Transcript of Multi-Time Frame Analysis (1).pdf
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MULTI-TIME FRAME ANALYSIS ON EXCEL & ON METASTOCK EXPERT By Hitendra Vasudeo - hitendravasudeo.com
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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
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Basic Filtration
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1) Trend
2) Volume
3) Open Interest
4) Candle & CP/LC Ratio
5) Price Gain/Loss
6) Fresh Signal/ Fresh Trend
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Advance Filtration
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Motion and Strength
1) ADX
2) RS
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Slope Concept
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Rate of Change- Representing Slope
Rate of Change of ADX
Rate of Change of RS
Rate of Change of DRV
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Levels- Pivot Levels (Wilder’s RTS)
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Execution
Pre Market – Based on Pivots
Live Market:
Open/Close Strategy
Pivot Strategy
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Trend
Trend identification based:
Subjective and Objective Analysis
We prefer Objective Analysis
Moving Average
Use Variable or Adaptive Moving Average
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Moving Average: Variable
Exponential moving average
Automatically adjusts
Smoothing percentage
Volatility of the data series
Sensitivity-current data.
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Volume
Volume breakout
Gain Volume over previous Day/Week/Month
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Open Interest
Gain in OI preferred for Directional Trades along with the trend, rise in
price and rise in volume
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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
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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
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Price Gain/Loss
1 Day Price Gain or Loss
For Up Trend- Gain are considered
For Down Trend- Loss are considered
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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
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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
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Advance Filtration
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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
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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
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Motion and Strength
RS- Strength or Relative Strength (Not RSI)
Stock Price/Nifty or SENSEX= RCS
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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
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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
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Motion and Strength
Strength Decreases: Stock Price falls faster than Benchmark
Stock Price steady and Benchmark rises
Stock Price rises slower than Benchmark
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Motion and Strength
RCS of RSI for 7 trading days
RCS of RSI for 7 weeks
RCS of RSI for 7 months
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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
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Rate of Change- Representing Slope
Rate of Change of RS
Strength Should be rising in Up Trend
Strength Should be falling in Down Trend
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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
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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
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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
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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
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Execution
Live Market:
Open/Close Strategy
Intra-day up trend= Price >Open
Intra-day down trend= Price <open
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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
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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
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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
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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
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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
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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
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Execution
Live Market: Pivot Strategy
Objective is to Sell High and Buy Low
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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
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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
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Final Pick for Buy or Sell
RS- Relative Strength which defined the order of preference
Along with
Risk Management
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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
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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
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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
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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
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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
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Thank you
For
Being Patient
Hitendra Vasudeo
Stockmehanics.com
Hitendravasudeo.com