How focusing on the daily charts can FIX the above trading problems:• Over-trading - Daily charts help inhibit over trading because you get fewer signals but they are more accurate. Most traders over-trade from focusing on lower time frames. Thus, by moving your focus to the more reliable daily chart, you will have a natural guard against over-trading, that is assuming you are disciplined enough to only trade obvious signals on the daily chart that you have mastered previously by mastering one Forex trading strategy at a time.
Note how the daily chart gives you less data to look at each day but it’s much more pertinent. The 30 minute chart gives you 48 times more data to look at since there are two 30 minute bars per hour in a 24 hour day. You are much better off learning to trade the daily charts so that you can see what all the market movement resulted in each day, rather than trying to analyze and make sense out of each little tick of the lower time frames….
• Fear of placing trades - Patience is very important in Forex trading and discipline as well, waiting for the best signals on the daily charts influences you to develop these positive trading habits. When you become a patient and disciplined Forex trader, you will naturally foster a confident trading mindset and this will work to eliminate the fear of trading that you may have experienced recently. The key to waiting for the best signals is of course knowing exactly what signals you are looking for.
• Over-analyzing – Daily charts provide for set and forget Forex trading and this allows you to spend less time staring at your charts and less time analyzing the market and all its variables. This is a good thing, more is usually not better when it comes to Forex trading, in fact, after you learn to trade effectively, you are better off spending as little time as possible analyzing the market and looking for trades. 30 minutes a day is all you need if you are focusing on the daily charts, this is of course after you have mastered an effective trading strategy like price action.
• Addiction to trading – 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. People become addicted to lower time frames and watching the price movement, this is counter-productive and simply a huge waste of time. You want to trade like a sniper and not a machine gunner; the daily charts give you this ability.
• Trading inconsistently - 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.
The “real” Forex market close:
Trading daily charts that close at 5pm New York time is important
because this marks the end of the current Forex trading day and the
start of the new trading day as New Zealand trading opens. Closing
prices are the most important price in the market because they show the
settlement between the bulls and the bears, and because the New York
trading session is the second biggest behind London in Forex trading
volume, it’s very important to see this closing settlement at the New
York close instead of at some other more arbitrary time.
In closing:Finally, I don’t expect you to take my word for any of this, instead, go look at the daily charts for yourself, draw in the horizontal support and resistance levels and learn to spot the price action strategies that I teach. I feel very passionate about focusing on the daily charts, but I challenge you to prove to yourself why it is the best time frame to trade. One of the main reasons why most traders fail to make money is because they are stuck in a cycle of over-analyzing and over-trading on lower time frame charts. If you want to fast-forward your learning curve and learn to trade effectively as quickly as possible, check out my price action trading course here and learn more about daily chart trading with simple yet effective price action strategies.
Success in Forex = Learning + Practicing + Update Knowledge