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Forex Daily Chart’s for Successful Trading!
Written by: PaxForex analytics dept - Thursday, 27 December 2018 0 comments
Many new traders that come into the forex market tend to gravitate towards very short-term trading. It is a fact that most traders trade way too much. The reason they trade too much is primarily that they are too obsessed with trading lower time frame charts. The different types of trading charts illustrate a few ways price movement is expressed over a period of time. Looking at these types of trading charts can give investors an opportunity to analyze and understand price movement in a way that isn't possible without reviewing data from a chart.
Traders believe that by trading the lower timeframes they have more opportunities available to them to trade, and thus they can generate more profit in the long run. Although in theory, this type of thinking may sound logical, it is really just a trading myth and one that leads many traders astray. You must understand the fact that support and resistance levels, chart patterns, candlestick patterns, and other technical signals on the larger timeframes such as the daily forex charts and weekly charts are much more reliable than on the lower timeframes.
If you are trading based on the 15 minutes, 30 minute, or 60 minutes chart, try to move up to the daily chart for of trading. There are several advantages to this. Firstly, the technical signals and patterns that emerge on these higher timeframes are much more reliable and worthy of your attention than the patterns you encounter on the lower timeframes. Many times what might appear to be a chart pattern or candlestick pattern on the 1 hour chart is simply nothing more than market noise. But a chart pattern that progresses over
several weeks on the daily timeframe is certainly something that you should be keeping a keen eye on.
Many traders spend hours upon hours analyzing fundamental data, technical data, and anything else they can get their hands on that they erroneously believe will give them more insight into the future track of the market. The problem with this thinking is that all variables are ultimately reflected via the simple and natural price movement of a price chart. The daily chart gives us the most pertinent view of the market, so if you are not focusing mainly on the daily chart, you are probably spending too much time on other less-pertinent market variables that are only going to confuse you and cause you to enter trades that are based more on “guessing” than on sound price action trading logic of the daily chart.
Once you accept that all trading signals are stronger and more significant on the daily charts than any time frame below, you will be less likely to get addicted to staring at your charts and analyzing the market. All trading signals are stronger and clearer on daily charts than on time frames below, thus it makes your trading more effective and consistent over the long-term due to the increased reliability of the signals. Remember, trading success is defined by consistency, and if you want to have a steadily increasing equity curve you will need to slow-down your trading activity and learn to analyze the market from the more pertinent perspective that the daily charts provide.