Huzefa Hamid is a senior analyst for DailyForex.com. He began trading forex in 2005, and was already a full-time equities and options trader, having left the financial sector in London, UK, to trade full time. Mr. Hamid quickly developed a technical style of trading, using price charts over fundamental data to make his trading decisions. Today, he uses a combination of chart patterns and Fibonacci levels to place his trades. Mr. Hamid has always enjoyed communicating his ideas to other traders and developing a shared learning environment. Over the last two years, he has written for DailyForex.com, explaining his trading logic and reaching out to other traders. In addition, early this year, Mr. Hamid founded TheForexRoom.com with two other experienced traders to call live daily trades.
There are plenty of timeframes to trade, but after working a lot of various strategies, daily forex trades make the most sense-and money, says Huzefa Hamid.
Traders know you have a lot of different choices when it comes to timeframes but the daily timeframe is very popular and it's important to our guest today, Huzefa Hamid from theforexroom.com, so Huzefa, why the daily timeframe?
Hi, Tim. When I started off trading, I immediately wanted to be a full-time trader and I thought the best way to be a full-time trader was to trade the shorter timeframes and really take your capital as fast as possible and that's true to an extent if you're certainly trading 15-minute and hourly charts, you will get two or three trades in a day rather than two to three trades in a week or a month trading longer time patterns, but the dailies are for professionals as well.
It's not just for people who've got full-time jobs or people who treat trading as a hobby. Professional traders, full-time traders, asset managers use the daily time frames, use them to plan trades, use them to find entries and exits, and there are a couple of advantages with dailies.
First of all, you're going to see pairs that you may not look at if you're just focusing, let's say, the two or three majors for your day trading. There are dozens of forex pairs and really interesting and odd crosses and some really exotic stuff like Singapore dollar, Norwegian krone or the euro-yen or the pound-yen or those kinds of more regular crosses, but they can often miss your radar if you're just focusing on the two or three for your intraday stuff so when you're looking at dailies, you can look at 20, 25 pairs and most brokers now have that number of pairs on their ladder, on their quotes to look at so when you're seeing more pairs, you're going to see the cream of the crop.
If you're focusing on just two or three pairs, you're taking setups but they may not be the best setups but that's all that's available. When I started trading stocks, I remember about 10 years ago when I was trading equities initially, I was looking up hundreds of stocks on my watch list and that allowed me to pin the best trends and it's the same with forex. If you're looking at more pairs, you're going to find some fantastic setups. That's the first reason.
The second reason is spreads. If you're looking at dailies, you don't have to worry about spreads too much. You can take a trade with a seven-pip spread if you've got a 100 pip target.
Does that necessarily mean your trades are longer term if you're watching daily charts and plays you can trade based on that, is your trade going to be two, three days, four days long, a week long?
Yeah, that's one thing you have to bear in mind. You will be holding overnights and you will be in a trade for maybe a week, two weeks even, depending on your new setup or your strategy.
Do you find that the daily patterns are cleaner, easier to find, easier to see?
One think I like about the dailies is that you have all the kind of news announcements contained within that daily range so you're not worried about a jump intraday, in the news announcements so I'm not worried if it's coming up to an NFP day or another news announcement will be around the corner if I'm holding a trade for a week. If the setup is taking two weeks to form, usually there's probably news announcements contained in the daily range. In that sense, it's a lot cleaner, yeah.