Trading systems are based on technical analysis, which is made up of charts, indicators, oscillators, price patterns, etc. Like music, technical analysis is a universal language. Traders can apply technical analysis to any instrument in any market, such as Google shares on NASDAQ or the Japanese yen on foreign exchange (forex).

A typical chart consists of many bars; each bar represents the open, high, and low closing prices for a specific period. A bar on the weekly chart represents the prices for a specific week, while a bar on the daily chart represents the prices for a specific day.

Most traders analyze the charts in a single period, usually daily. This is not enough; The markets are too complex to be analyzed in a single period. Each time frame is related to its next higher and lower time frames.

The secret of the time frame in the trading system is to use at least two but no more than three to make a decision on any trade. This system is called the “Triple Screen Trading System” introduced by Dr. Alexander Elder in his book “Trading For A Living”.

For day traders, they can choose the hourly chart as their favorite trading period. Then immediately go to the daily chart as the higher order time frame to analyze the trend before making a long or short decision. Traders can use any trend following indicator to identify a trend on the higher order time frame. Once the trend is identified, return to your favorite hourly chart to find where to enter, exit, take profit, and stop loss. Traders can also go down to analyze the chart on a lower time frame to find a trailing top.