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#260: Trading with the Daily Direction

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Trading with the Daily Direction

In this weekly video:
00:27 – How to increase your win rate
00:53 – Trading is all about probabilities
01.25 – Looking to buy or sell trades
01:46 – Taking setups that are in the direction of the daily trend
03:15 – Don’t take trades that are against the bigger trend
03:38 – I post daily trend analysis to help you – link below

Trading with a daily direction can give you such a great advantage when trading for shorter time frame chance. Let's talk about that and more right now.

Hi, Forex traders. Andrew Mitchem here, The Forex Trading Coach video and podcast number 260.

How to increase your win rate

I want to give you a really useful piece of advice that will substantially increase your win rate. It's all about trading with the likely overall daily direction, trading with the bigger picture. You see, if you can trade where the bigger trends are likely to be going, then it stands to reason you're giving yourself a higher chance of having a profitable trade, providing, of course, your technical setup is correct in the first place.

Trading is all about probabilities

Trading is all about probabilities. That's really all it is. It's about seeing technical setups and knowing that if a certain setup, a certain candle pattern, a certain price has been hit, a certain support and resistance level, whatever it might be that you're looking for, you know that, given history, when that setup shows, you know that the probability is that the trend or the pair will move in this direction. You know that because you've analysed that. That's how you have your strategy in the first place.

Looking to buy or sell trades

Of course, when we're looking for trades in the Forex market, we can look for buy trades or sell trades, to go long or short, to go up or down, and that's the beauty with the Forex market, and that's one of the reasons, one of the many reasons why we love trading the Forex market, the ability to buy and sell and make money on both directions. It's a fantastic benefit of trading Forex.

Taking setups that are in the direction of the daily trend

However, when you think about it, if you see within the course of a day … Let's say you're trading one hour charts. You see five trade setups and you see sell trade setups. Which ones are likely to work for that day? No one really knows, of course, until after the facts happen, but when you think about it, if you see on the daily chart, let's say a big up trend and you see strong, bullish candles on the daily chart, but it stands to reason that if, within that day on a one hour chart, you see strong buy setups, good, strong, technical, buy, trade setups, it means that you're trading with the bigger picture.

They could be continuations on the one hour chart or they could be right after a pull back, which, by the way, you've probably seen the sell trade and you've ignored it because, for today, you're looking for buy trades. You've ignored that little pull back and now you're seeing a good, strong, bullish candle pattern, ready to ride the bigger picture of the daily chart, and now it looks like the one hour chart's ready to resume. It's up trend after a pull back.

Again, it's probability, stacking as many favourable items in your favour as possible. This could be, sort of, the candle pattern. It could be the trend line breaks. It could be bounced at round numbers. All these type of things that we're looking for, and now on top of that it means that if we're trading in the likely daily direction, that has to have more weight to our trade, and that's to give you a higher overall win rate.

Don’t take trades that are against the bigger trend

You just think about it. Why would you take sell trades on that day if the likely bigger picture is for the market to move up? Yes, you might catch some little retracements and some small pull backs, yes you might, and yes, you might miss some good reversal trades, but wait for them to be over, then look to ride the trend up again if the bigger picture is up. That has to add probability.

I post daily trend analysis to help you – link below

To aid you with this, for my clients I post specific trading daily information on our membership site, but if you're not a client, what you can do is log in and see a free, basic version of what I post for my clients every single day on my membership site, sorry, on my website.

What I'll do is I'll put a link below this video and podcast so you can go and have a look. It's called daily trades on my website, daily trades and analyses. You can go and have a look at that every day. It's to say that over the course of the next 24 hours from the start of the 5:00 PM eastern standard time New York close and open of a new day, these are the likely directions we're looking for, bigger picture. When you're trading the shorter time frame charts, that then means that if you see trades in the same direction, that has to add weight to your overall probability, and therefore increase your chance of a successful trade.

Hope that helps. It's a really useful tip. This is Andrew Mitchem, The Forex Trading Coach, have a great weekend. I'll see you this time next week.

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