top-down trading method is a trading method that utilizes at least
two time frames to perform a technical analysis
a financial instrument. It is also called multiple time frames or
different times frame trading
because it uses more than one time frame.
a top-down trader always starts the technical analysis from the
time frame) to the down (lower time frame), hence the name top-down
example, one starts the technical analysis on the weekly chart, then
switches to the four-hour
before going to the fifteen-minute chart. In that instance, one is
using three different times frame.
one starts from the two-hour chart before making a trading decision
on the five-minute chart. Now,
is using two times frame instead of three. In both cases, one starts
the technical analysis from a
time frame but drops down to a lower time frame.
top down traders use three time frames. A long term time
and a short term time frame. Indeed, the long term time frame (higher
time frame) is for the high probability trading set-up,
the medium is for the
and the short term is to time the entry at a low risk point.
the standard top-down trading uses three time frames, one may use
more than three time
A better approach will consist of using another higher time frame
(above) the set-up
time frame (long term trend) to validate the trading set-up.
one can also use more than one time frame to gradually prepare for a
ultimate purpose of a valid top-down trading is to align the long,
medium and short term trends in view to participate in a trending
market in a timely fashion. In fact the trading
is when the medium term
is just about to realign with the long term trend after a divergence
(contra-trend). Similarly, the entry is when the short term
trend begins a mini cycle of the long term's at the point where the
medium term is about to resume the long term trend.
a top-down swing trading
of a top-down day trading
15M and 3M
60M and 10M
of a top-down position trading
weekly and 4H