Trading Insights

Trading Insights

Higher time frame confirmation for traders

Trading Insights
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When trading higher time frames, traders often look for higher time frame confirmation to identify trend, and establish the dominant trade direction of the markets.

Many traders when studying the higher time frame, often use traditional lagging means of analysis on the higher time frame itself, using a multitude of older techniques. These higher time frame techniques can include trend line identification, position of the market above or below a major moving average, volume coming into or going out from the market, or tests of market support or resistance at the higher time frame.

What's interesting to note, when analyzing the higher time frame with the Flux data mining software, is how these lagging, and older means of identifying trend are often times too late, or much later into the trend turn than is desirable for traders. You have to wait for the turn, to confirm the turn, and on a higher time frame that usually means the trade is long into profitable territory - and traders begin chasing the trend and increasing risk.

Take a look at this chart:

Emini S&P Higher Time Frame analysis

Analyzing the higher time frames of the Emin S&P

Every marker on this chart - every dot - has nothing to do with price action on the screen at the time.

Each dot represents a time, that the Flux software from Back To The Future Trading identified a week before that price bar - as a high probability trend time. The software was telling you -

"Hey, I've analyzed several thousand bars of data, and determined the following times coming up in the future as likely candidates for repetitions of these major runs".

How often do these events repeat? How often are the times relevant, in the future?

Look at the chart for yourself. This 60 minute Emini S&P chart is clearly a higher time frame than most traders that day trade look at. But we clearly see on this higher time frame that the overwhelming majority of the Flux times were actual trend births, and trend deaths. Knowing these exact times put you in the very beginning of the trend, the majority of the time.

With statistics and probability on our side, it would then be possible to identify trend on the higher time frame BEFORE THE TREND BEGINS, and enter small positions early - or take all of the signals that come on the lower time frame, in the direction of the anticipated higher time frame trend.

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