Strategies · Lesson 5 · Advanced
Multi-Timeframe and Triple Screen
You resolve indicator conflicts by using the larger timeframe as a directional censor and the smaller one for timing.
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Direction on top, timing below
Triple Screen solves the core problem: an oscillator says buy on the 4h chart and sell on the 30min chart. You always start with the larger chart.
Screen 1 is the censor: the slope of the EMA or the MACD histogram sets the permitted direction. Screen 2 looks for the pullback against this main trend on the smaller chart.
Direction on top, timing in the pullback
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Combine direction and timing into the permitted action.
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The key points at a glance
- The same indicator gives a buy and a sell signal at the same time on different timeframes.
- Screen 1 (large) sets the permitted direction.
- Screen 2 (small) looks for the pullback against the main trend.
- Screen 1 up plus Screen 2 down equals Buy.
Deep dive
Factor of 5: which two timeframes fit together
Triple Screen starts with the choice of timeframes. Elder's factor-of-5 rule: each timeframe relates to the next by about a factor of 5, one weekly bar holds roughly 5 daily bars.
- Neighboring pairs with a factor of 4 to 6: 4h and 30min, daily and 1h
- The larger chart is Screen 1 and sets the direction
- The smaller one is Screen 2 and provides the timing
- Monthly against 1min tells you nothing, too much happens in between
Why you always start with the big chart
If you start small, your eyes are biased and in the big chart you only see the confirmation. First Screen 1 sets the allowed direction: if the EMA or MACD histogram is rising, only longs are allowed.
Goodman's example: the same BTC move looks smooth on the long-term chart, zooming in on 2017 shows a 30 percent drawdown over the summer. In crypto a 20 percent wick on the 15min is often just a breather on the daily.
The Triple Screen matrix and the timing
Screen 2 looks for the counter-move against the main trend. If Screen 1 shows up and Stochastic sits at 85, you wait until it drops below 40, then go long. The pullback is timing, not a reason to trade against the direction.
- Screen 1 up, Screen 2 down: buy stop just above the last minor high
- Screen 1 down, Screen 2 up: short the rally
- Both the same: safer to wait for a pullback
- The Impulse System colors the bars: green allows long, red allows short, blue is neutral
Sources: Elder, Murphy
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