How to Improve Your Forex Trading by Trading Daily Charts

How to Improve Your Forex Trading by Trading Daily Charts

Many beginning Forex traders fall prey to the “trap” of trading the lower time frames by trying to “scalp” the market or day-trade. Now, just to clarify, when I say “lower time frames” I mean anything below a 1 hour chart. The problem with trading these short time frames is that you can’t see the forest for the trees, so to speak. Meaning, you can’t see the clearer and bigger picture of what the market is doing because you are too fixated on the smaller and less meaningful price movements of the small time frames.

Whilst there is a time for day-trading and being an intra-day trader, that time usually comes after a trader has already built his or her trading account up and has already become consistently profitable in the markets. What most traders do is begin trading on the smaller time frames, and it’s only after they lose more money than they care to admit to their friends and family, that they try trading the higher time frame charts. In other words, you need to learn how to trade on the daily chart and other higher time frames, and once you master that you can try your hand at trading the smaller time frame charts.

• The filtering power of the daily time frame

To put it simply, not every movement the market makes is meaningful. A lot of the time the market is simply backing and filling, and it’s these times that traders usually get chopped up and lose their money. Now, the point is that if you are trading the 5 minute chart or other low time frames, you are going to be exposed to a lot more of this back and filling than traders who solely concentrate on the 4 hour or daily chart time frame for example. So, the best forex trading systems are those that are taught using daily charts and other higher time frames. Trading lower time frame charts is much more likely to induce emotional trading within you because you will be exposed to more random price movement that will tempt you to want to trade. So, by simply concentrating on the daily charts you can eliminate a lot of this temptation.

• Learn that “less is more” in Forex trading

Most traders come into the Forex trading community trying to use forex strategies that look and sound fancy but that deliver little in the way of consistent trading results. This is because most of the strategies and systems out there are based on lower time frame charts and most beginning traders are very attracted to these hot sounding strategies and systems because they think it will make them some Wall Street day-trader. However, the reality of Forex trading is a little bit different; actually it’s quite a bit different. You see, trying to trade with forex indicators and on short time frame charts is like a double-whammy of confusion and mixed signals. You’ve got the lower time frames that are naturally choppy and more random than the daily charts, combined with indicators plastered all over your charts, how are you supposed to make sense out of a mess like that?

• Successful traders don’t sit at their computers all day

If there is one thing that all retail home-based professional Forex traders have in common, it’s that they aren’t sitting in front of their computer for 8 hours a day analyzing the markets. They know that the trading is a game won by patience, and since they know this they have adopted trading strategies that work with this reality rather than against. This is why you are unlikely to see a professional retail Forex trader sitting by his charts watching every little tick the markets make. Instead, they have a sniper-like mentality that allows them to trade the markets with accuracy and detachment from any emotional connection to their trades. Traders like Nial Fuller and others are some of the more popular mentors teaching traders to trade in this sniper-like style, check out this nial fuller interview to learn more and always remember that daily chart trading is a natural guard against emotional trading, so use this fact to your advantage and stop trading the lower time frames today.


More FOREX-news on pages InstaForex.Com