Trend timeframe, setup timeframe, entry timeframe

Give each chart one job, as in the three screens at the top of this page. The higher chart answers “should I buy, and where?”; the lower chart answers “when, and where is my stop?”. The entry chart never overrules the trend chart.

  1. Trend (highest): the direction you are allowed to trade and the room to the next target. Example: the weekly chart makes higher highs and higher lows.
  2. Setup (middle, often the daily for swing traders): price has pulled back to a level worth buying, such as support or a rising moving average.
  3. Entry (lowest): the moment to act, such as a higher low followed by a break of a small high, and the swing low the stop goes under.

How far apart should the timeframes be?

A commonly cited guideline is a step of about 3 to 6 times between timeframes. It is often credited to Alexander Elder’s Triple Screen approach, which suggested a factor of roughly five. Treat it as a rule of thumb, not a law.

Too close, such as 1-hour and 30-minute, and both charts say the same thing. Too far, such as daily and 1-minute, and the entry chart is pure noise next to a daily target, while a stop that tight gets hit by ordinary wiggles. Day traders usually pair the 1-hour with 15- or 5-minute entries, as in the best timeframe for day trading. Common pairs:

  • Weekly to daily: about 5 sessions in a week.
  • Daily to 1-hour: 6.5 hours in a regular US session.
  • 4-hour to 1-hour, or 1-hour to 15-minute: 4.

Worked example: buy on the 1-hour, not on the daily close

Hypothetical, as in the drawing below. A stock’s daily chart is in an uptrend. It pulls back from a high at $58.00 to support near $50, an old breakout level, and the pullback low prints at $49.00. The target is the prior high at $58.00. Buying on the daily chart: a daily candle closes strong at $52.00, and the stop goes under the daily swing low, at $48.80. Risk $3.20 a share; reward to $58.00 is $6.00, about 1.9R.

Buying on the 1-hour chart: price holds above $49.00, makes a higher low at $50.20, then breaks the last small high at $51.20. Buy at $51.20 with the stop at $50.00, under the 1-hour higher low. Risk $1.20; reward to $58.00 is $6.80, about 5.7R.

With $100 at risk, the daily entry buys 31 shares and the 1-hour entry 83. The target did not move; the stop did. The catch: a tighter stop is hit more often by normal noise, and sometimes the 1-hour trigger never comes while the daily trade works. A bigger R multiple on paper is not a higher chance of winning. Size from the stop with the position size calculator, and see the risk reward ratio guide for the math.

Turn your phone sideways to read the drawing. Tap to close.

Two hand-drawn panels. Left, buy the daily close: a daily pullback from near 58 to about 49 ends with a strong candle and a buy triangle; entry 52.00, a dashed red stop at 48.80 and a dashed green target at 58.00; underneath: stop 48.80: risk $3.20; 1.9R, 31 shares. Right, buy on the 1-hour: a low, an arrowed higher low and a break above 51.20 with a buy triangle; a dashed red stop at 50.00 and a green arrow up to 58; underneath: stop 50.00: risk $1.20; 5.7R, 83 shares. Highlighted footer: same $100 risk, same $58 target.

Where should you buy? At the level, not after the move

An entry timeframe only helps at a higher-timeframe level. A 1-hour higher low in the middle of nowhere is just a lower-timeframe trade with a bigger story. Mark the level first on the higher chart, using support and resistance zones or a pullback to a rising moving average, and only then drop down. UpTickFlow, our TradingView indicator, marks levels on 5-minute to 1-hour charts and draws the entry, stop and target when a candle closes at one.

Set the stop under the lower-timeframe swing low the setup depends on. If that stop would sit inside the noise of normal candles, go up one timeframe rather than squeeze it. Triggers to look for on the lower chart:

  • A higher low after the test of the level, then a break of the last small high.
  • A candle that dips below the level and closes back above it.
  • A break and retest of a small range that formed at the level.

When timeframes conflict: the higher timeframe wins

The most common entry mistake is letting the lower chart overrule the higher one, such as buying a strong 5-minute bounce while the daily chart is falling. Two more traps: analysis paralysis, adding charts until one disagrees, when two or three timeframes are enough; and moving the stop to a higher timeframe after entry because the trade went against you. Decide which timeframe owns the stop before you buy.

The drawing below sorts the four cases:

  • Higher up, lower up: look for entries at levels.
  • Higher up, lower down: a pullback in progress; wait for the lower chart to turn back up at the level.
  • Higher down, lower up: a bounce against the trend; no long entry.
  • Higher down, lower down: no longs; stand aside or follow your short plan.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn 2×2 grid: rows for the higher timeframe (up, down), columns for the lower timeframe (up, down). Up and up: a green check, buy at levels. Higher up, lower down: a clock on yellow, pullback: wait for the turn. Higher down, lower up: a red cross, bounce: no long. Down and down: a grey cross, no longs.