In the previous two installments of this ongoing series of FX Trading Basics I outlined the methods I use for determining the trend. In today’s installment I want to discuss, how I combine multiple time frame analysis and stochastics in identifying high probability set-ups versus low probability set-ups.

First, some bullet points to outline my thoughts:

1. Higher time frames, generally, but not always, take precedent over lower time frames.
2. Stochastics, for me, are a filtering mechanism; not a timing mechanism. (...)