Should you trade the short time frame charts?
In this weekly video:
00:22 – Always getting asked this question – I cannot trade the main sessions
01:20 – Go to the longer time frame charts
01:54 – Getting affected by fundamentals and spread size
02:38 – How much time to you want to spend at the charts each day?
03:23 – Trade less and make more
03:52 – Trade analysis and a 55% gain per year
Should you look at trading short time frame charts? Let's talk about that and more right now.
Always getting asked this question – I cannot trade the main sessions
Hi Forex Traders. This is Andrew Mitchem here, The Forex Trading Coach. Video and podcast number 237.
Now, I get questions every week, and probably every day and people say to me, “Look Andrew. I can't trade the US session. I can't trade the European session. I'm at work. I've got family commitments. I'm asleep then,” all these kind of issues that people have and for some reason, people seem to think that they have to trade the European session, which of course if you live in America, that's no good because it's like two or 3:00 in the morning.
People think they need to trade the US session. Well, for me here in New Zealand, that's two or 3:00 in the morning. I had a guy just yesterday from New Zealand. He said to me, “I can't trade the European session because that's our night time.” He said, “I work nights so I can't trade in that European session, which I know is the most active time and it's the most profitable time to be a Forex trader. How do I get around it because I can only look in the daytime, which is the Asian session, and nothing happens most days in the Asian sessions so I can't trade. How do I work this, Andrew?”
Go to the longer time frame charts
Well, the simple answer is, go to the longer time frame charts. Go to the daily charts. You could trade five and 15 minute charts if you wanted to. My system works very nicely on those time frame charts. In all honesty, I don't trade them. It's just something that just doesn't suit my personality. I don't like sitting, watching the charts, watching the screen all the time, feeling like you have to be taking trades all the time. The shorter the timeframe you go, generally the less reliable the trading information, the technical information is.
Getting affected by fundamentals and spread size
You are more likely to get influenced by news events like fundamental events and widening spreads. Spreads actually become such a big part of your actual performance, because if you're trading and taking like a handful of pips maybe at like 10, 20 pips of profit, depending on the trade. You've paid two or three pips to get into that trade, all of a sudden, 10, 15% of your profit is being eaten up by the spread.
If you trade longer timeframe charts such as like daily charts and your profit target may be in 80 pips, 100, 150 whatever it might be depending on the trade again, and the volatility in the market at the time. I can handle paying two or three pips because it doesn't really make a great deal of difference.
How much time to you want to spend at the charts each day?
The other thing is also, how much time do you really want to spend at your charts? By trading the daily charts, it doesn't matter where you live in the world. I've got clients in 59 countries all around the world, all with different jobs, different set of commitments that they have in their life, and not a single person has a difficulty replacing my daily trades. Why? Well, I place retracement orders and then also I personally place part of my position at the market. I look at the 5pm close of New York day candle, and make my analysis from there. A daily chart has a lot of valuable information in it. The fundamental news that comes out within a day generally doesn't effect it too much, because you have bigger stop losses and you can allow for those swings within the market.
Trade less and make more
It also means a lot less stress. Why would you not want to trade less but be more consistent and make more money? It just doesn't make sense why you'd want to go staring at charts all day watching five minute charts, be scared and watching every pip move up and down. It's crazy.
Really, to answer the question for those people, it doesn't matter where you live in the world. It doesn't matter whether you can trade the European session or the US session, because you don't need to be sitting there watching the charts at those times if you choose to trade the longer time frame charts.
Trade analysis and a 55% gain per year
Now, I've also done some analysis of my own results this year. Far and away above everything else, the best performing time frame chart for me personally this year, are trades from the daily charts. It's been a tougher year without a doubt. Up 13.4% on the daily charts this year with half percent risk. Last year I made 34% on the trades that I recommended on a daily basis to my clients. Clients could have just copied half percent risk, total per trade spin into two positions, half of the retracement, half at the market order, and made 34% without any compounding just last year, copying once a day.
Of course, you can still take trades on other timeframe charts and I recommend people look at things like for, six, eight, 12 hour charts. I also post trades for my clients on weekly and monthly trades as well.
For me personally, daily charts, definitely sort of the optimum time frame to trade. If you're trading daily charts only, you need 10 minutes once a day and that's it to analyse the market. I've also done some analysis on my daily trade suggestions that I've posted every day, of the day, every day throughout the last seven years, since 2011.
Now, if you had $100,000 in 2011, and you did nothing else than copied my daily trade suggestions right through to now, through to the beginning of August 2017, in that six and a half years, you would have made an average of 55% per year including compounding. $100,000 back at 2011, January 2011 today would be up over $460,000. That's a 360,000, sorry, 360% gain on your original account with compounding in those six and a half years. That's doing nothing else than just copying what I suggest once a day for maybe take you to copy two or three minutes. I takes me 10 minutes to analyse the market. Of course I write up information for clients and it takes a lot longer to write it all and post everything. For you as the trader, to analyse yourself, 10 minutes once a day, as a client to copy what I say, and post it and place it on your account, a couple minutes once a day. That's it.
At 55% gain on our account on average per year, with compounding for six and a half years, not bad is it? When you look at that, why would you want to stare at five minute charts all day. I’ll leave that with you.
This is Andrew Mitchem, The Forex Trading Coach. Have a great weekend. I'll see you this time next week.