Filtering futures trades using higher timeframes can help prevent losses. In this example, although the 3-minute chart was showing a short trade, by simply glancing at the higher timeframes, the trader could see that the trade would not likely work out.
Filtering Futures Trades Using Higher Timeframes
In this video, Gail Mercer, founder of TradersHelpDesk, shows how to filter a lower timeframe trade setup using higher timeframes with the TradersHelpDesk Stochastics, Directional Volume, and ADX. Even if trading binary options on futures, this trade would not produce sufficient movement for profits.
In this example, the 3-minute chart was showing price was at the ATR (blue plus sign). However, the Directional Volume indicator clearly showed that buyers stepped in. If the trader looked at the 12-minute chart, the Stochastics was showing the market was overextended and an ADX magenta peak was imminent. That would push price up to the ATR on the 12 minute chart. This was also confirmed with the 45 minute chart because the Stochastics was indicating the market was oversold, as well. The combinations of these clues help filtering futures trades because they indicate that the trade would not make money. Even if a higher low was formed on the 3 minute chart there was not sufficient room for profits even if using binary options to limit risk.
The Create Your Own Package is a great package to start for new traders who are filtering futures trades. You can choose any three indicators for either NinjaTrader 8, Multicharts, or Tradestation. Of course, the package also includes online video training, documentation and templates to get you started.
For more experienced traders, the Silver Package is ideal. It includes all the indicators, plus online video training, documentation and our Skype group.