The Daily Charts are great to trade
In this weekly video:
00:25 – I’ve traded the Daily charts for the last 12-13 years
00:36 – Trading to make money
01:35 – It doesn’t need to take all day at your computer to be a full time Forex trader
02:10 – Don’t worry about using a big stop loss
03:16 – Reliability increases with the Daily charts
04:46 – Trade less with higher probability trades
I'm going to explain why I love trading the daily charts. Let's get into that right now.
Hi, Forex traders, Andrew Mitchem here, The Forex Trading Coach. This is video and podcast #212.
I’ve traded the Daily charts for the last 12-13 years
I'm going to explain about the daily charts, why I‘ve traded them for the last 12, 13 years, why they're my favourite time frame charts, why I believe you should have a look at trading them also. Now, let's start with the obvious thing about trading.
Trading to make money
Why we're all trading? Well, I supposed the real reason we're trading is we're making money out of trading. We're looking at making money from our trading.
The aim of trading is not to spend all day trading. It's not an aim to be sat at your computer all day long because what's the point. It's not the end result. The end result is to make money. Now, if you can do that by say trading the daily charts just once a day and it might take you 10 minutes, 20 minutes once a day let's say, then why would you not do that? Why would you want to sit at charts trading say 1 minute or 5-minute time frame charts for hour upon hour upon hour because you got high stress situations.
To me, the aim of course is to make money and if you can do it by taking not a lot of time out of your day, then that helps even better.
It doesn’t need to take all day at your computer to be a full time Forex trader
Not everybody wants to be what you call full-time trading as in like sitting and trading all day. I'm a full-time trader but I don't sit trading all day. With the coaching, I'm helping people as well but the daily time frames allows that.
Whether you're doing other work, whether you're tired, whether you've got kids, whether you've got other work to do, whatever it might be, by having the ability to trade for say, just a shorter time frame, a short amount of time per day, then that really has to help and of course, it is profitable also then that really makes it worthwhile.
Don’t worry about using a big stop loss
You've got little time taken, great trades, low stress, high reward to risk trades. Don't worry about the stop loss. A lot of people come to me and they go, “Hey, Andrew, you keep talking about daily time frame charts, how can I trade daily time frames because I can't afford an 80 pip stop loss,” let's say. That's where you need to think differently. Everybody can afford an 80 pip stop loss or a 100 pip stop loss whatever it needs to be. It's just that you need to reduce your position size.
Don't just think I'm taking a 0.1 lot or a one standard lot because I do that on every trade and therefore, if I lose on a daily chart trade, it's a massive loss. It's not. Every trade that you take should have equal risks, equal percentage risks. For instance, the way I trade and the way I teach, if I have a losing trade, I lose half of 1% of my account. It doesn't matter whether it was daily chart trade or a weekly or a five-minute chart trade. It's the same. Half of 1% is still half of 1% regardless of the stop loss of the trade. It's just the position size that gets adjusted.
Reliability increases with the Daily charts
Reliability comes also with daily time frame charts. I'll give you an example. Say, today, I'm trading a short position on the British pound/Australian dollar. Why? Well, the British pound is looking really weak across everything and then the Australian dollar is looking very strong against everything. Let's put the two together, you would expect to get weakness in the pound/Australian dollar.
Not only do I expect it on the charts, I see it. I see a lot of room for that to move further downwards and I've taken the position … I took it around six hours ago. The trade is on. We're still in the Asian session or early part of the European session starting, so nothing has really happened yet. But I'd anticipate that as we get into the European session, that trade is going to make some good movements and I'm anticipating it's going to move down because all charts say so, strength and weakness says so. If that works and gets my profit target, I've got about a three and a half to one reward-to-risk trade that from something that I did six hours ago and took me 10 minutes absolute maximum to scan through all the charts.
If you are the sort of person that thinks, “Well, I can't fit the trading into my time frame. I'm too busy at work. I've got kids, family,” whatever it is that you're doing, you can and you can trade daily time frame charts by looking just once a day, longer time frames, more reliability, far better charts to trade.
Trade less with higher probability trades
Actually, it makes you trade less as well. One of the problems that most new traders do is they want to trade all the time. Not a good thing to do. Trade less, higher probability trades make more money, less stress. Win-win all around makes you a far better trader, makes you far more money, takes less time. I cannot see why everybody would not want to do it. I hope that helps.
If you have any questions that you like me to talk about or topics you like me to talk about on future videos and podcasts exactly like this, send me an email, [email protected]
As you can see, it's a wonderful day here. I'm outside because I don't want to be sitting on computers and trading one five-minute charts to weather like this. I'd much rather be outside having a bit of fun and a fresh air.
Have a great weekend. I'll see you this time next week. This is Andrew Mitchem, The Forex Trading Coach.