Trading Daily or Intraday Charts?

Filed under: Learn Forex Trading |

Screen shot 2013-01-31 at 15.30.29One of the things that you will have to decide on if you are looking to trade the forex markets (or indeed any other market) is whether or not to use the intraday charts to make your trading decisions. Today, I am going to look at some of the pros and cons of using both daily and intraday charts.

 

To begin with, one of the good things about trading off of the daily charts is that you have plenty of time to make good, informed decisions. The intraday charts sometimes move so fast that you have to make quick, snap decisions. However, the daily charts move much slower, and give plenty of time for analysis and reflection. The spreads on the daily charts also have a much-mitigated effect on your trading, as stop losses tend to be wider when using the daily charts, and as such, the spreads become a much smaller percentage of your risk.

 

While the intraday charts do have their uses, such as spotting early trend reversals, there are many aspects of daily charts that make them superior and more reliable. The levels of support and resistance on daily charts are much more reliable and respected more often, and as such, price action signals at these levels have a much higher probability of success; so much so, that I am in fact thinking about maybe just using the daily charts to trade off for a while, as my trades on the 4-hour charts have not been very successful of late. It takes a lot of skill to trade successfully off of the intraday charts, and the smaller the timeframe you look at, the more skilful and experienced you need to be. My advice to beginners is to trade the higher timeframe charts, and to be patient – about as patient as can be.

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