While the UK is focused on the latest Brexit plan, the GBP/USD could react sharply to the FOMC state...
Win at Forex While You Keep a Day Job
02/09/2015 9:00 am EST
When most people come to forex trading they imagine a career where they can make buckets of money and also have all the free time in the world. What tends to happen is these same traders become obsessed with the markets and instead of having more free time, they spend every waking minute in front of a screen. They spend even less time with their families than they did before they came to trading.
Trading doesn't have to be like this, and it doesn't have to take over your life. Traders need to keep in mind why they came to forex in the first place and go about using a strategy that gives them their time back.
There is an approach that gives traders the above mentioned luxury. This method entails only trading the larger charts on the weekly and daily time frames.
See also: Forex: The Power of Higher Time Frames
Benefits of Trading the Daily Chart
When traders are learning to trade the forex market, it is advised that they stick to the longer-term time frames such as the weekly and daily charts. This rule doesn't have to belong to only beginning traders.
Many people have jobs that prevent them from watching their charts for hours on end, and what spare time they do have they wish to spend with their families.
Trading the weekly and daily charts has the following benefits:
Trading outside the "noise:" Trading the daily charts allows traders to more accurately determine the flow and trend of the markets without the wild swings the intraday charts such as the five- and 15-minute charts are prone to. Small times frames such as the five-minute chart can react with extreme volatility, whipping traders out of their positions and making it hard to profit even if they do pick the correct direction.
Lifestyle: Traders can look at the charts once at the end of the daily chart close and make entries, manage trades, or take profit from existing trades. There is no reason to watch trades for hours on end. All the trader must do is check in once each candle is closed every 24 hours.
People can keep their day jobs: Trading the daily charts allows traders to place trades once a day and then go about their normal lives. There is no requirement to watch the screen all day long. The market has to move and do its thing, and there is no reason for the trader to watch this provided they have their targets and stops in place.
Ease and simplicity: Trading the daily time frames is very straightforward compared to making trades on a fast-moving intraday chart. Traders have time to assess and make up their minds on a particular trade before entering or exiting.
Stick to the Weekly and Daily charts
Trading the daily charts gives traders what they came to trading for. They get a chance to make accurate trades and at the same time not have to spend obscene amounts of time sitting in front of a screen going crazy!
It is highly recommended that new traders stick to trading the longer-time-frame charts. It is important for traders to get the correct processes down before they contemplate moving to smaller, intraday charts as well.
Trading the daily and weekly charts allows traders the time they need to get the correct processes in place and perfect their methods. This can be extremely hard on small charts such as the five-minute chart because even seconds spent making up your mind could cost you money.
Once a trader has become profitable in the daily and weekly charts over a minimum period of six months, they can start thinking about taking their trading methods and apply them to the intraday charts such as the four hour. The same method is then to be used.
Traders should prove themselves profitable on the four-hour chart before contemplating trading on one-hour charts. This method of moving down the time frames can be used until the trader is content with the time frames they are trading.
Most traders find that after becoming successful on the daily and weekly charts, they feel no need to move down to the smaller charts. The reason for this is they have the best trading world possible. They have the potential to make money but are also able to spend time away from the computer doing things they love.
Related Articles on FOREX
Fluctuations in the value of the dollar directly impact the returns that U.S. investors see on their...
A higher currency price is a distinct disadvantage for a country wishing to sell products on the wor...
The consensus expectations for Friday’s headline non-farm payrolls data point to around 180,00...