Having the ability to look at multiple different timeframes at the same time is a blessing, but it can unfortunately also be a curse. Have you ever been analyzing the markets and found the perfect trade setup but then after the 30 minutes to an hour that you have just spent, you look up and notice that you are on the 4-hour timeframe rather than the 15-minute chart, all that work you have just done is wasted.
The majority of the time, when a strategy is created, it has been created to work with a specific timeframe, as soon as you turn onto a higher or lower timeframe, the strategy no longer functions in its optimum form. Accidently changing to a different time frame is an incredibly easy thing to do, in fact, when you open up a new chart it is often loaded on the 1-hour timeframe, so unless you remember to change it, it will remain on that while you perform the analysis for your strategy.
Different timeframes can also have an effect on your mentality and your confidence in the markets, now that may sound strange but it is true. You have a great trade setup, all the indicators on your current timeframe indicate that the markets will go up, but now you have seen people online stating how their analysis shows that the markets will go down, but they are on a higher timeframe to you, this can hit your confidence and make you second guess your own strategy and analysis, but it shouldn’t.
You need to remember that they are using a different time frame which has nothing to do with your strategy, yes the 4-hour chart may ultimately go down, but the 15-minute chart that you are using for a shorter-term trade may well still go up, you need to ignore the indications on the other charts (unless it is part of your strategy to look at them also) and concentrate on the one that you know and understand.
If we were to break down trading into just two different categories, short term trading, and long term trading. The short term traders do not have the time to analyze hundreds of factors, they use the smaller 1 minute, 5 minute or 15-minute timeframes, they look for very specific things and put in trades with the expectation to get out quickly. Long term traders use the larger timeframes, from an hour up, they have the time to analyze the markets at a much deeper level and take their time with each trade. Using a timeframe above or below what your strategy demands will cause issues and increase the chance of losses.
It is even worse for those that are kind of in the middle if you use the 30-minute timeframe, for example, the 15 minute and 1-hour time frames could counter your 30-minute analysis, but concentrating on what you know and not taking that into account can be beneficial, having a look at multiple different ones that don’t relate to our strategy can cast doubt into your mind and knock your confidence on both that trade and your overall strategy.
Let’s imagine that you have a trade on the 1-hour timeframe, it is an uptrend which is what you want, the markets look like they could be turning on the 1-hour chart, but when you look at the 4-hour chart, it makes it clear that it should continue. Bearing in mind that your strategy and trade was based on the 1-hour chart, should you get out of the trade or hold it for the 4 hours? You need to close it, your analysis was for the 1-hour chart, no matter what the 4-hour chat states, you should not take it into account as you did not when first analyzing the trade.
There are a few ways to help avoid using the wrong time frame by accident, we would suggest having a tick chart for each of your trades, at the very top you can out to check that you are on the timeframe, you would be surprised how many times we have started to analyze for 10 or 20 minutes before realizing we are on the wrong time frame. In order to avoid having others cloud your judgment, try not to look online or ask others for input while analyzing and putting on trades, this helps you to concentrate on your trading and it does not let others influence you or damage your confidence.
Having said all that, looking at multiple timeframes can help your trading, it can give you a lot more confirmations for the trade, however, it needs to be based on your strategy, stick to the way it works, if you use one or two, stick to those ones, don’t venture out onto timeframes which are not relevant to your current trading strategy.