Trading Off the Daily Chart Strategy

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Today we will be discussing what I believe is the most important time frame that a forex trader should consult before executing any trade. What I am referring to is the daily timeframe chart.

The daily chart provides a host of valuable information that should not be overlooked. After reading this article, you should have a solid understanding of why the daily chart is a trader’s best friend, and how you can incorporate the daily timeframe into your own methodology.

How to Trade the Daily Charts

Whether you are a short term day trader or an intermediate term swing trader, you should always refer to the daily timeframe chart as part of your daily market analysis each morning. The daily chart is the most watched timeframe by professional hedge funds, dealing banks, large traders, and other major market players that can normally move markets.

The forex daily chart provides a currency trader with an indispensable overall market view from which they can create a long side or short side directional bias. This is valuable information that will help you stay on the right side of the market.

Your daily chart analysis with allow you to gauge whether there is more buying or selling pressure in the market, and also help you avoid buying into major resistance zones and selling into major support zones. You should analyze the last few months of price action on the daily timeframe and ask relevant questions about the current market conditions such as:

Is the market trending, if so in what direction?

Is the market consolidating, if so where is the high and low range?

Where it the next higher resistance level?

Where is the next lower support level?

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Are there any patterns emerging on the chart?

Are we close to a weekly pivot point or important round number?

Where is the 50 and 200 period Moving Average relative to current price?

Make sure that while you are going thru your checklist of questions, that you are simultaneously marking the chart with key S/R levels and other important considerations that will help you form a long, short or neutral market bias.

Once you have gone this this exercise, and formed an opinion based on your sound analysis, then you will be trading from a more informed standpoint. As a result, you will be more comfortable taking trades without constantly second guessing yourself.

More Reliable Price Action Patterns

Many new traders that come into the forex market tend to gravitate towards very short term trading and day trading. One of the reasons for this is that these 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. Price action is smoother on the daily chart and you can generally get a real sense of where the market is trying to go. This is quite a bit harder to do consistently on the smaller timeframes.

When utilizing an end of day trading strategy, you will be able to assess your risk vs reward in a much higher probability manner than you would otherwise on say an hourly, or 15 minute chart. The supply and demand swings that are created on the daily chart are by far more accurate than lower time frames in general. Having a solid sense of the true potential profit vs risk on a trade as shown on the daily chart will put you miles ahead of other retail traders that bypass this type of analysis.

Trade Less, Make More

One of the simplest things that a trader can do to improve their trading almost overnight, is by switching to a higher timeframe. If you are trading based on the 15 minute, 30 minute, or 60 minute chart, try to move up to the 240 minute, 480 minute or daily chart for eod trading (end of day trading).

There are several advantages of this. Firstly as we mentioned earlier, 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 candle stick 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.

A second reason that trading daily charts in forex is much more desirable, and one that is much less talked about is the cost of trading advantage. Remember, your broker’s dealing spreads and commissions are the same whether you are looking to make a trade for a 20 pip profit or one with a 200 pip profit.

For example, if you are looking to put on a trade for the USDCHF pair and it has a dealing spread of 2 pips, then you would wind up paying 10% of the profit on a 20 pip target vs 1% of the profit on a 200 pip target. Now that’s a huge difference in cost. As such, if you are a very short term trader, you should not under estimate the negative effects that this could have on your bottom line over the long run.

Put a Lid on Overtrading

There are some traders that have yet to learn the benefits of trading daily charts, while there are other traders that do understand the advantages of trading the daily chart, but have other issues that need to be dealt with altogether.

Some traders are addicted to the action of trading, and have a psychological need to get in and out of the market constantly. Its like an adrenaline rush that they just cannot shake. This type of overtrading can obviously be counter productive and lead to inferior results or worse could cause them to blow up their accounts eventually.

There are other traders that tend to micro manage everything and as a result they are constantly watching their position tick by tick, overanalyzing the charts, and scaling in and out of positions. These traders are hype active, and have a very hard time just putting on a trade based on their forex daily analysis and letting the market do its thing. These traders feel as if they must be in control at all times. They are also usually emotionally charged traders that tend to trade rather irrationally based on gut feelings.

The best advice that I can give to any trader that has a hard time controlling their emotions in the market is to try a “Set and Forget” Trade management approach. What this means is that you should enter your Stop loss and Take profit target the moment that you place your entry, and then just simply step away from the computer screen.

With some practice, a trader can become much more disciplined in the market utilizing this type of effective hands off approach.

Reduce Risk and Leverage

Every trader should have a detailed Risk Management plan in place. Within the risk management plan, you should address things such as the average risk per trade you will take, the Risk to Reward ratio that you will be looking for, how you will deal with drawdowns, and the maximum amount of leverage you will use.

Some novice traders have come to believe that they are not able to trade off the daily charts because they would have to place a stop loss at a relatively large pip distance compared to what they would on a smaller time frame. And therefore, they would be risking too much relative to their small account if they do so.

This assumption is wholly incorrect. Even though the average daily range for a currency pair will be much higher than the average hourly or four hour range, the only thing that a trader needs to do in this case, is to reduce the position size to adjust for the potentially larger stop loss. And thus, by doing so you will in effect, reduce your effective leverage which will in turn reduce your overall risk exposure in the market.

Again keep in mind that the primary job of a trader is risk management above all else. And one way that we can reduce risk is by reducing our leverage.

Let’s illustrate the point with a comparison.

Scenario A : Long 1 lot EURUSD with a 30 Pip Stop ( $ 300 risk )

Scenario B : Long 0.2 lot EURUSD with 150 Pips Stop ( $ 300 risk )

Both Scenario A and Scenario B have the same $ 300 at risk but in A we are trading a full lot and with B we are trading 0.2 lot. And so, Scenario B is using 1/5 the leverage of Scenario A.

Now lets say we take each position on Friday and hold it over the weekend. And assume at the new week’s opening the EURUSD opens 200 pips lower on a weekend gap down.

Well if this were to occur, Scenario A would have lost $ 2000 while Scenario B would have lost just $ 400 in comparison. That’s a big disparity and due to the effects of leverage. You should consider that the next time you feel that the stop loss on your daily forex signals is preventing you from trading on it.

In trading, you should always try to follow the path of least resistance. This means that if a market is moving in a particular direction, odds favor the continuation of price in that direction, until the weight of evidence to the contrary proves otherwise.

Using a daily forex chart for technical analysis can guide you in analyzing real trends in the market. When looking at daily fx charts to find trends, you want to make sure that you are looking at the right amount of data. Typically, you would want to analyze the prior 120 to 150 daily bars on the price chart. This is a rough guideline, but has worked well for me as my forex daily strategy for analyzing potential market trends.

Here are a few simple techniques for finding emerging and established trends in the market using the daily chart.

Swing High and Lows – During an uptrend, the market will make higher highs, and higher lows. Conversely during a downtrend, the market will make lower lows and lower highs.

50 and 200 Period SMA – The two most watched moving averages on the daily chart are the 50 period and 200 period Simple Moving Averages. Compare where price is relative to these averages, and watch out for times when price crosses these levels, as it could be a prelude to future price moves.

Trendlines – As simple as they are, trendlines are invaluable when it comes to trend identification and potential reversal points. Be on the lookout for breakout closes outside the trend line as this could be an early warning signal of a reversal taking place.

Top Down Trading Approach

Trading using a Top down analysis approach is something that every aspiring trader should get in the habit of doing. With this type of analysis you would typically start by analyzing the longer time frames such as the monthly or weekly charts. Then you would move down to the daily chart. Only after you have done this would you start your analysis of the intraday charts such as the 240 minute, 60 minute or lower.

A multiple time frame approach can help a trader in trade selection and in filtering out potentially bad trades. One of the most important timeframes to consider in a multi time frame analysis is the daily chart. This is where the major participants do most of their analysis and as such where you will find some of the best Support and Resistance levels to trade off of.

Most professional traders will want to know what is happening on the daily timeframe regardless of what their trading timeframe is. Whether you are a day trader or swing trader, you would want to try to trade in the direction of the momentum as seen on the daily chart.

If you only rely on one time frame to trade, your trading timeframe, you are trading with a handicap and reducing the chances of a successful outcome on your trade. For example, You could be trading directly into a Key S/R level, or the trend on your trading timeframe is just a correction, or you are trading against a candlestick reversal pattern on the daily chart, or a whole host of other unforeseen technical events that you could be ignoring.

Swing Trading Opportunities

Now that we have had an in depth discussion on some of the benefits for utilizing the daily time frame chart, lets discuss the importance of combining the daily chart for overall market bias and using the 240 minute chart to look for technical signals and in fine tuning your trade entry.

The combination of the daily chart for trend identification and the 240 minute chart to find trade opportunities and fine tune entries is generally considered a swing trading approach. Swing traders typically hold trades from 2 days to about 7 days or so. The swing trading timeframe provides ample opportunity for traders to engage with the market on a regular basis, while keeping transaction costs to a minimum. In that regard it is the best of both worlds when comparing it to day trading or long term position trading.

Here’s one way that a swing trader might combine the two timeframes into a logical strategy. He can start by plotting all major levels on the daily chart including S/R levels, Supply and Demand Zones, and Fibonacci levels. This serves as his big picture levels. Then he could zoom down to the 240 minute chart to analyze price interaction at these levels. This serves as his trade entry timeframe.

He may look for a strong price rejection in the form of a reversal candlestick pattern or a strong breakout thru these key higher time frame levels. He can then quickly make an assessment and act accordingly. With this approach, the trader is taking into consideration both the price action on the longer timeframe daily chart along with the price action on the shorter term 240 minute chart. This combination will serve to provide higher probability trade setups for this swing trader.

Additional Advantages of Using the Daily Chart

Here are some a few additional ways that trading the daily time frame will improve your results:

Trade Part Time – There is no requirement for you to be a full time trader or watch the computer screen all day to be an effective trader. In fact, as we have pointed out throughout this lesson, trading less can often lead to better results. And as an added bonus, you can also keep your day job so that you always have that income source coming in for yourself.

Learn To be Disciplined – Trading is one of the hardest things that you can do. And one reason for this is that what feels good in trading is often the wrong thing to do. Our human element works against us in trading, especially when we are too active in the markets. The daily chart helps us to step back a bit and forces us to trade less.

Taking the Cream of the Crop trades – There is no doubt that price action and patterns that appear on the daily chart are some of the most reliable of any timeframe. When we see a formation on the daily chart, the chances of success are much higher and we can be more confident that the pattern is real and not just smoke and mirrors.


Throughout this article, we have stressed the importance of incorporating the Daily time frame chart into your own trading. In fact, switching from a lower time frame mindset to a higher time frame mindset is the single fastest, most effective way to increase you win rate and overall profitability.

I would challenge you to do a manual or computerized backtest of your strategy and run it on the daily chart, and then compare those results to lower timeframes such as the 60 min or 30 min. I am willing to bet that you will see better results on the daily bars test in an overwhelming majority of cases.

Aside from the obvious financial benefits of trading the daily timeframe, the psychological benefits should not be under estimated. You will spend less time glued to your computer screen, watching every up and down tick. You can benefit from having a Set and Forget type of trade management approach and ultimately learn to detach the all important process of trading from the not so important outcome from any particular trade.

I hope that this lesson has proved useful to you, but remember that all the knowledge in the world is useless, unless you internalize it and more importantly begin to start taking action on it for yourself.

Listen UP.

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Daily Chart Forex Trading Strategy for Non Day Traders

This Daily Chart Forex Trading Strategy is a very simple Forex trading strategy that beginner Forex traders will find easy to use. If you think that trading the daily chart fits your lifestyle better than intra-day trading, take this trading strategy for a spin

Daily Chart Trading Setup

  1. Currency Pair: Any
  2. Timeframe: Daily
  3. Forex Indicators: stochastic indicator required with default setting(5,3,3)
  4. Fibonacci: Retracement tool
  5. Candlesticks : Knowledge of reversal candlesticks
  • Trades are less frequent which means you don’t over trade
  • Less market noise involved in the daily timeframe compared to the 1 hr or the 30 min and much more lower timeframes.
  • The trading signals tend to be much more reliable as well.
  • Much bigger profit potential.

The stop loss would tend to have a large distance because it is based off the daily chart.

Does that mean you risk is huge?

Your risk should be set with an eye towards a percentage of your trading capital. In Forex, we have many variations of lot sizes we can trade so while the protective stop in pips may be large, it can still be a small percentage of your risk capital.


We all know that a market will trend and consolidate. It will repeat this over and over again. An uptrend will eventually turn into a downtrend and the opposite is also true.

In between a full blown trend change, we will get corrective moves and that is what this simple daily chart trading strategy wants to capitalize on. We want to see price meet up with one of our Fibonacci levels and confirm with our stochastic oscillator.


The rules are quite simple and this is a pretty easy Forex strategy that you should be able to replicate. Just follow the trading instructions listed below.


  1. The Forex pair was in a downtrend and we used an objective trend measure – a break of a trend line
  2. We also had price take out a previous high which starts to set the stage for an uptrend
  3. Once a high is in place, we can draw our Fibonacci retracement levels
  4. Price pulls back to the 61.8% retracement level and puts in a beautiful price action reversal candlestick
  5. Stochastic was just in an oversold zone so this is a valid trade and we place a buy stop trading order at the high of the reversal
  6. Take profit was a main swing high in the opposing market trend. This gave a 4.56 reward to risk ratio.


  • This is one of those Forex trading strategies that has the potential to give you over 100 pips a day due to it being a larger time frame trading system
  • We don’t have to worry about random fluctuations in price or news releases that will affect day traders.
  • The daily trend carries more weight than an intra-day trend so you have the benefit of having wrong footed day traders propelling your trade
  • I think it is a pretty easy Forex trading system that you can learn pretty quickly.


The Truth About Trading Daily Timeframe Nobody Tells You

Last Updated on August 1, 2020

Trading daily timeframe is not exciting to most traders.

It requires a ton of patience.

It has fewer trading opportunities.

Trading daily timeframe is the answer for most traders (with many “hidden” benefits) — especially if you have a full-time job.

The truth about trading daily timeframe

You might not know this but, trading daily timeframe offers many benefits not found on the lower timeframe.

1. You’re more relaxed and make better trading decisions

Have you ever traded on the 5mins timeframe?

Then you’ll agree it can be stressful because a new candle is formed every 5minutes.

You’ve got to make a decision to buy, sell, hold, or stay out in a short period of time.

This means you have less time to think which cause you to make wrong trading decisions (like chasing the markets).

On the other hand…

If you trade the daily timeframe, a new candle is formed every 24 hours.

You have more time to think, plan and execute your trades — so you’re less prone to making the wrong trading decision.

You make better decisions, your results improve — and trading becomes more relaxed.

2. News events don’t matter

Here’s the thing:

When you trade on the lower timeframe, news events (like FOMC, NFP, etc.) is a big thing.

You’ll notice the price goes “crazy” and flies up and down on your charts.

Here’s an example: NFP on EURUSD 5mins timeframe:

This means if you trade the lower timeframe you must be aware of the news or, you’ll get stopped out for nothing.

If you trade the daily timeframe, then news event hardly matter.

Here’s an example: NFP on EURUSD daily timeframe:

Notice there’s only a small blip on the chart?

You’re unlikely to get stopped out of your trades as your stop loss is wider (and can accommodate the “crazy” swings on the lower timeframe).

So the bottom line is this:

If you trade the higher timeframes, the less impact news has on your trading.

3. You have freedom

Here’s the thing:

The daily timeframe only paints a candle once per day.

So there’s no need to constantly watch the markets because there’s “nothing” to do till the market closes (and a new candle is formed).

Imagine, how much more freedom you’ll have when you’re no longer a slave to the markets?

4. You can compound your returns and grow massive wealth (even with a small trading account)

Now as a daily timeframe trader, you don’t need to spend all day watching the charts.

This means you can get a full-time job and combine with trading to grow massive wealth.

Let me prove it to you…

Let’s say you make an average of 20% a year with an initial sum of $5,000 and you contribute $5000 to your account each year.

Do you know how much it’ll be worth after 20 years?

After 20 years, it will be worth… $1,311,816.

5. You can focus on the process and become a consistently profitable trader, fast

I’ve seen many traders who go all in to trade full-time, and fail.

Now it doesn’t matter if their trading strategy works or not because the odds are against them.

Because they encounter the “need to make money” syndrome.

This is where you break your trading rules (like widening your stop loss) to avoid a loss.

The reason you do it is because you rely on your trading profits to pay the bills — and you’ll do whatever it takes to prevent a loss.

But if you’re trading the daily timeframe, then you can have a full-time job.

And now the odds are in your favour because you don’t have to rely on your trading profits.

Even if you have losing months, it’s not the end because your job will provide your living needs.

This means you can focus on learning how to trade and not worry about whether you can pay the bills.

Won’t this help you become a profitable trader in the fastest possible time?

6. You put the odds in your favour

One of the biggest reasons why traders fail is because they don’t pay attention to the transaction cost.

And that can be a difference between a winning and losing trader.

  • You have a $10,000 account
  • Transaction cost is $10 per trade (buy and sell)
  • You place 500 trades per year (from day trading)

If you do the math, you need a return of 50% just to break even!

But what about trading daily timeframe?

  • You have a $10,000 account
  • Transaction cost is $10 per trade
  • You place 50 trades per year (longer-term trading)

Now, you just need 5% to breakeven — a big difference.

Can you see how transaction cost is a killer?

So if you want to put the odds in your favour, trade smarter and trade lesser.

So, is trading daily timeframe for you?

Now I’ll be honest.

Trading daily timeframe is not for everyone because different traders have different goals.

So, if you fall into any of the categories below, then trading daily timeframe (or higher) isn’t for you.

Trading daily timeframe is NOT for you if…

  • You want to generate a consistent income
  • You want “fast action”
  • You’re into proprietary trading

Why trading daily timeframe don’t offer you a consistent income

When you the higher timeframe, you have a lower trading frequency.

This means you need time for your edge to play out (possibly over a few months).

So, if you’re looking for a consistent income from trading, this approach is not for you.

Why trading daily timeframe is not for “fast action” traders

Every candle on the daily timeframe is painted once per day.

It’s a slow trading approach for traders who don’t want to be glued to the screen all day.

Why trading daily timeframe is a proprietary trader’s nightmare

The goal of a proprietary trader is to generate a consistent income from trading (by trading frequently).

But as you’ve learned, trading the daily timeframe doesn’t allow your edge to play out fast enough to generate a consistent income

Does it make sense?

So decide now whether trading daily timeframe is for you.

Because if it isn’t, then you can stop reading and find something else that suits you.

But if you know it’s for you, then read on…

Trading strategy for the daily timeframe

The 2 most common ways to trade the daily timeframe are…

  • Swing trading
  • Position trading

Swing trading

Swing trading is an approach which seeks to capture “one move” in the market.

The idea is to endure as “little pain” as possible by exiting your trades before the opposing pressure comes in.

This means you’ll book your profits before the market reverse and wipe out your gains.

Here’s what I mean…


  • You don’t need to spend hours in front of your monitor because your trades last for days or even weeks
  • It’s suitable for those with a full-time job
  • Less stress compared to day trading


  • You won’t be able to ride trends
  • You have overnight risk

If you want to learn more, then go read…

Position trading

Position trading is an approach which seeks to ride trends in the market.

The idea is to capture “the meat” of the move and exit your trades only when the trend shows signs of reversal.

Here’s what I mean…


  • It requires less than 30 minutes a day
  • It’s suitable for those with a full-time job
  • Less stress compared to swing and day trading


  • You’ll watch your winning trades turn into losing trades, often
  • Your winning rate is low (around 30 – 40%)

If you want to learn more, then go read…

Now, once you’ve developed your trading strategy, the next step is to develop a routine to ensure your trading success.

The secret to daily timeframe trading success

(This is important so don’t skip this section.)

A trading strategy is only one part of the equation.

Because you still need a trading routine or you won’t find trading success. If you ask me, this is the secret between winning and losing traders.

You’re probably wondering:

“So, how do I develop a trading routine?”

Well, there are 3 parts to it…

  1. Create and update your watch list
  2. Commit to your schedule (execute and record)
  3. Review your results

1. You create and update your watch list of markets

(This can be done on the weekends when the markets are closed.)

After you’ve developed a trading strategy, create a watch list of markets to trade (whether it’s Forex, Stocks, Futures, etc.).

Next, scan through your watch list and identify the markets which offer a potential trading setup (this should be according to your trading strategy).

You want to “mark” these markets so you can focus on them in the coming week.

You can do it on excel like this…

Or if you’re using TradingView, you can highlight it like this…

2. You commit to your trading schedule

Since you’re trading the daily timeframe, then it makes sense to make your trading decision after the close of the daily candle.

This could be morning, afternoon, or night (depending on where you are) — so create a schedule where you can commit to it no matter what.

If you’re in Asia, then the daily close would be in the morning for you.

So, every morning you’ll check the markets from your watch list and see if there’s a potential trading setup.

If there is, then you move onto the next step…

3. You execute and record your trades

Now if there’s a valid trading setup, you execute the trade with proper risk management.

Then, you’ll record the metrics like…

Date – Date you entered your trade

Time Frame – Time frame you entered on

Setup – Trading setup that triggers your entry

Market – Markets you’re trading

Price in – Price you entered

Price out – Price you exited

Stop loss – Price where you’ll exit when you’re wrong

Initial risk in $ – Nominal amount you’re risking

R multiple – Your P&L on the trade in terms of R. If you made two times your risk, you made 2R.

An example below:

For the full breakdown, check out this post below…

4. You review your trades and find your edge

Once you’ve executed 100 trades consistently, you’ll know whether your trading strategy has an edge in the markets.

Expectancy = (Winning % * Average win) – (Losing % * Average loss) – (Commission + Slippage)

If you have a positive expectancy, congratulations!

It’s likely your trading strategy has an edge in the markets.

But what if it’s negative?

Then you apply my AFTER technique…

  1. Identify the patterns that lead to your losses — and avoid trading these setups
  2. Identify the patterns that lead to your winners — and focus on these setups
  3. Tweak your trading plan according to your findings
  4. Execute the next 100 trades with your updated trading plan and record the trades
  5. Review your trades

If you do what I just shared, you’ll improve your trading results and eventually, find your edge in the markets.

Whether you’re a winning or losing trader, the AFTER technique can be applied to you.

If you’re a winning trader, then it’ll take your trading to the next level.

If you’re a losing trader, then you have a method to get yourself into the green.


So, here’s what you’ve learned:

  • The benefits of trading daily timeframe — you’re more relaxed, the news doesn’t matter, you have freedom, you can grow massive wealth, and you put the odds in your favour
  • Trading daily timeframe is not for you if you want a consistent income or you want a career in proprietary trading
  • You can adopt a swing trading or position trading strategy on the daily timeframe
  • Your trading routine consists of creating your watch list, committing to your trading schedule, executing your trades, and reviewing your trades

And there you have it!

The truth about trading daily timeframe that nobody tells you.

Now here’s what I’d like to know…

Do you trade on the daily timeframe? Why or why not?

Leave a comment below and share your thoughts with me.

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