Novice and veteran traders trying to trade the Forex market with daily charts run into a variety of hurdles. Often these longer term graphs can be deceptive and have traders falling for predictable mistakes. To help combat some of these issues, today we will review three helpful tips for daily chart traders.
The first tip for trading a daily chart is finding the trend! One of the benefits of trading the daily chart lies in the long drawn out moves of the Forex market. While this number of periods can be moved up or down to your liking, having a reference will keep you from looking at too much price data which substantially increases the difficulty of finding the trend. Going back and referencing this price data on a daily chart allows us to identify market direction, while creating a trading bias.
If the trend is up, daily chart traders will wait patiently and look for opportunities to buy the market. At no point should we consider trading against the trend. Daily chart traders need to avoid the bug of having to be in the market now. This can be incredibly difficult especially if you are watching markets on a daily basis. Remember that trading with Daily Candles may only yield one or two appropriate positions on a single currency pair for a whole year.
This means staying out of the market and keeping your trading capital free until an opportunity emerges. The easiest way to remain patient is to keep a trading journal and join a trading community. In my experience this allows you to hold yourself accountable for following your trading strategy.
For instance if you are trading with CCI on a daily chart, such as the example below, your trading journal should only show two entries! If your report is showing something different, it is time to reevaluate your trading plan.
Traders that are trading on a daily chart should be aware of the larger intraday swings of the market. The main focus for this is to avoid being taken out of the market prematurely. ATR can help you find the average movements for a pair for a given period of time. Using this rule traders can still trade conservatively even on a daily chart by limiting their leverage.
Even if you are trading with a large or small account balance, if you are having problems with this consider using smaller lot sizes. Interested in learning more about Forex trading and strategy development? Register here to continue your Forex learning now!
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Click here to dismiss. Talking Points Identify the trend to form a trading bias using 6 months of price data.
Time your entries, and wait patiently for trading opportunities. Managing risk is an important step in trading the Daily Chart, plan accordingly. Foundations of Technical Analysis: Classic Chart Patterns, Part I. Upcoming Events Economic Event.
Forex Economic Calendar A:More...