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How-to-use “multi-chart drawing” tool

Learn to use the drawing tool on multiple charts, with an example strategy 

We traders often use multiple time-frame for chart analysis and identifying trading opportunities. When I first started trading, I quickly learned advantages of looking at price action of a trading symbol in multiple time frames. Therefore, when I am analyzing charts for trade opportunities, I look at a higher time frame for trend, and major price reversal points.  While doing so, I draw horizontal lines, and rectangles to mark these price levels or link swing points with trend line etc. Then I look into chart using a smaller time-frame to see how price action appears, and look for low risk trading opportunities. As a result of this analysis, my trading results are significantly improved over time.

 

However, often, I made mistakes, (sometime costly), in visualizing the short term opportunities inside higher time frame.  To overcome these mistakes, I drew same horizontal lines, trend lines and rectangles on short time frame that I drew on the higher time frame. Also, I changed the styles and color of these drawing from the default settings so that can I could differentiate the higher time-frame drawing on smaller time-frame chart from other drawings.

 

This techniques helped my trading profits by leaps and bounds. Now, I could see a short term opportunity inside a big picture (higher time frame price levels). More importantly, I could quickly see if a short term opportunity was too risky, or has low probability, for example, taking short term long trade near higher time frame peak/ swing high.

Using multiple chart analysis technique, I had cut down on wrong trades and improve my profitability. This however, again came at a cost. Manually drawing on several charts and then re-drawing on the smaller time-frame required a lot of focus and constant updates to the levels. This often had to be done several times a day, and must be repeated everyday. The productivity gain was impacted by human errors in manual drawing and re-drawings and regular updates to the drawings.

 

I knew my chart analysis can be improved further,. The answer obviously was in automating the attachment of drawing from one chart to other charts. Trade station platform, though very popular, does not come with this feature built-in. With release 9.0 and continuous updates from Trade station, however, it finally became possible to write a software program to achieve this objective. I then build multi-chart drawing tool and have been using it for a few years now.

“Multi-chart drawing tool “ for trade station allows you to draw on one chart, and attach the drawings on other charts of the same work-space. The tool can attach horizontal lines, rectangles, and trend-lines from one “publisher” chart o all one or more “listener” charts in the same work-space.

Applying indicator on the chart

Assuming, you have subscribed to “Multi-Chart Drawing tool” from trade station App market, and you have used Trade station indicators before, you should be able to follow these instructions easily.

 

If you have not subscribed to the indicator, please do so by visiting following link. If this is the first time you are using Trade station platform or using an indicator on trade station, please use help section on trade station to learn about how to apply a indicator on trade station chart.

 

The drawing tool “multi-chart drawing” comes with indicators – multi-chart drawing -publisher, multi-chart drawing – listener. In order to use both these indicators should be installed as follows:

• On trade station platform, open a workspace or create a new workspace
• Make sure that you have more than one chart in the workspace. In the example, we have taken 3 chart of the e-mini Dow future YM with different chart type/ intervals. For demonstration, we are using a minute chart, a volume chart and a tick chart

 

Add Multi-chart drawing publisher indicator

• Select a chart as publisher chart. This is the chart where you will draw and you want these to replicate to listener charts. In the example image below, the 120 minute interval chart is the publisher chart
• On trade station menu select as follows: Insert->indicator. You will be presented with a menu (picture on the left)

• Select “Multi-chart drawing- publisher” among all the indicators (See highlighted text in the picture
• Ensure that the check-box, “prompt for format “ is checked ( see picture).

• Click OK button. This will open up Format indicator window
• You can modify the inputs to channel to any number. This channel number is used for publisher and listener tools to communicate. For most users, this can be left unchanged

Add Multi-chart drawing Listener indicator

• Now select a listener chart e.g. 3000 tick chart in the image below.
• On trade station menu select as follows: Insert->indicator. You will be presented with a menu (picture on the left)

• Select “Multi-chart drawing- Listener” among all the indicators (See highlighted text in the picture
• Ensure that the check-box, “prompt for format “ is checked ( see picture).

 

• Click OK button. This will open up Format indicator window
• Input channel here should be the same as that of the publisher. If you have not made any changes to the channel on publisher, leave the default value unchanged
• Following steps, add “multi-chart drawing-listener” to other listener charts in the same workspace as needed

Using Multi-chart drawing tool in chart analysis and trade setup

Now you are ready to test the multi-chart drawing tool.

• On the “Publisher chart”, using trade station “drawing objects” drawing tool, select horizontal line, rectangles, and trend-lines, and draw them at time interval visible on all charts.
• Once draw,n click on anywhere on the publisher chart. This should trigger drawing replication on other charts

• You should see drawing similar to the below image
• Any changes to the drawing to should only be done on the publisher chart.
• Get familiar with the tool by playing with tool by changing the location of the drawings, changing the “style” of the lines, and colors of lines and fill color of the rectangles. You should see drawing on all listener
• After make any change to the tool, please remember to click anywhere on the publisher chart. This event is required to propagate your changes from publisher to listener charts

Using multi-chart drawing and Continuous Trend indicator together in strategy

To demonstrate use of multi-chart drawing in a strategy, we will use strategy example given in the blog, “How to use Continuous trend indicator”

Trade #1 Short trade

As per the example strategy for short trade, following condition should be met:

• Down trend swing retest:
  • Entry- When trend is down and the price retests a swing high, enter short
  • Exit when the swing low is tested
  • Stop loss above the swing high

In the example trade shown in the image below, you can see that:

• Trend changed from neutral to down on daily chart, a higher time frame
• A swing high is drawn on the daily chart.
• A price level is drawn in 120 min chart (publisher), for possible short trade. Since this level is inside the swing high level of the daily chart, it meets our entry criteria

Now using a smaller time frame of 15 minutes, enter short one retest after the breakout of the 120 minute level. You can see from the daily chart, that trade was profitable when it was exited at the swing low as per the strategy.

Trade #2 Long break out trade

As per the example strategy for long breakout trade, following condition should be met:

• Entry-when trend changes to uptrend by virtue of breakout of swings highs, enter long
• Exit when the up trend changes to neutral or down
• Use a custom stop loss strategy based on the percentage of the equity of risk or price based or both

In the example trade shown in the image below, you can see that:

• Trend changed from down to up on daily chart, a higher time frame due to break out of swing highs
• The breakout candle is marked on the daily chart
• for a possible long trade, a price level is drawn in 120 min chart (publisher), after the daily trend became up trend. This level is replicated on daily and smaller time frame i.e. 15 min (listener) charts. The replicated drawings confirms levels on daily and provide a good entry price on smaller time frame
• Now using a smaller time frame of 15 minutes, enter long on retest of the 120 minute level. You can see from the daily chart, that trade was profitable when trade was closed as soon as trend changed to neutral

 

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