Rayner: 00:00 Today, I have a question from Kara who asks, "Hey, Rayner, if I want to use multiple timeframes in my trading, for example, the price is coming to a daily support, how do I use multiple timeframes to better my entry? Should I be looking at a one-minute timeframe, a five minutes timeframe, or the one-hour timeframe?" Here's my take on it when using multiple timeframes. You can think of it like let's say, for example, you're old. You're about 70 years old and you're trying to read the words on the monitor on your screen.
Rayner: 00:33 Okay, and that's pretty small, so what do you do? You get a magnifying glass and you look at the monitor. The magnifying expands the words and it's easier to read because now the font size is larger, but what if you magnify too much? Let's say you magnified to 10 times what it was and the font size expands, huge, so what happens? If you look at that now, the words will appear very large like one huge thing in front of you. You can start to see the individual grain of the pixel, and if you're looking at it, does it make sense? No.
Rayner: 01:11 You pretty much forgot what you're trying to accomplish in the first place because the thing is way too zoomed in, and this is the same as trading. If you're looking at the daily timeframe, for example, the price coming to an area of support and you zoom in down to the one-minute timeframe to better time your entry, it's way too zoomed in just like the magnifying glass example. You can see the individual bar and stuff like that, but it has no relevance to the higher timeframe because you're too zoomed in and whatever data you're looking at is pretty much noise relative to the daily timeframe. So my suggestion is if you want to find a sweet spot where you zoom in enough to see additional information at the same time using the information that is related to the higher timeframe, I suggest using a factor of four to six.
Rayner: 02:01 What I mean by this is that let's say, for example, the daily timeframe ... Price comes into support and you want to better time your entry, you can use an example of a factor of six. One day, you have 24 hours, so a factor of six means that you go down to the four timeframes to better time your entry.
Rayner: 02:27 If you want to use a factor of four, let's say you identify resistance on the four timeframes, so a factor of four would be then you go down to the one-hour timeframe, four hours divided by four which is a factor of four.
Rayner: 02:51 So this is the sweet spot to use multiple timeframes. If you use a factor of 20 or 30, I would say the information is too detailed and it has no relevance to the higher timeframe. With that said, if you want to learn proven trading strategies to get rich slow, head down to my website tradingwithrayner.com and I'll talk to you soon.
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