Live Trade and A Quick Look At Multi Time Frame Trend Alignment

I've got an open long position in the Eur/Usd this morning. I got a buy signal about an hour and a half ago and I quickly thought that this trade would be a loser because the pair fell and consolidated right after I bought. Now the trade seems to be coming to life as it is moving to newer highs...sometimes you have to have patience and let the trade develop. Here's a five minute chart that shows my entry along with a couple of notes about the setup:As you can see, it's the same basic setup that I've been using lately. Trender line is green, the Fisher MA crosses the Zero line and the RSI is trending but not in extreme territory. I've really been working on keeping my entries and exits as simple as possible.

The above system generates a lot of good signals and also quite a few false signals. One thing that helps eliminate some of the false signals is to look at a higher time frame (like a 1 hour chart if I'm trading off the 5 minute) and only take signals that are aligned with the trend on the higher time frame. Here are the correlated time frames I tend to use when trading currencies:

• Trading with 1 minute chart--align with the 15 minute chart
• Trading with 5 minute chart--align with the hourly chart
• Trading with 1 hour chart--align with the daily chart
• Trading with Daily chart--align with the weekly chart

These aren't hard and fast rules, they're just combinations that seem to work well for me. You can match them up in whichever way makes the most since to you. I know that other traders, like Brian Shannon at Alpha Trends, like to use 3 different timeframes. An example of his approach would be using the daily to determine the primary trend, the hourly to determine the secondary trend and then when both of those are aligned using the 10 minute chart to place the trade.

The point I'm trying to make is that by using trend alignment in multiple time frames, you can reduce the number of false signals and only take trades that have a higer chance of being profitable. There are many mediocre systems out there that could be much better if they incorporated some of the above techniques. Just some food for thought.

I'll post an update when the trade is closed out.

TLT