There are a lot of forex traders nowadays that neglect the importance of the daily chart. They don’t even talk about it. Why? This is all because trading charts are less exciting than other time frames, like 15 minutes or 5 minutes. A lot of traders think that it is just boring and offers few trading opportunities.
But these are just minor disadvantages. There are fewer spoken advantages of daily charts including higher profitable trades, leading to continuous profits. Other than that, daily charts also improve that trader’s trading discipline, psychology, and patience. Fortunately, there are three strategies for a successful daily time frame.
Trend Trading Strategy
“Trend is your friend” – If you are a forex Trader, you most likely heard about this popular saying. This saying is old but gold as a trend plays a major role in your success in forextrading. But at some point, the trend doesn’t always get on your side. If it gets reversed, then most traders will get caught up.
The basic rule in this trend trading strategy is to maintain a set of rules when identifying trend reversals and on-going trends. This way, you can minimize the trend losses. To further explain, we will be using the 21-Period EMA as well as the 9-Period EMA.
Using 21-Period EMA in finding trend direction – it is called a general uptrend if the pricing is above the 21-Period EMA while it is a general downtrend if the pricing is below 21-Period EMA.
Support and Resistance Trading Strategy
Another strategy to use in the daily chart is the Support and Resistance. It is considered the most profitable and highly rated forex trading strategy that particularly anticipates the movements of the market. In fact, almost all trading strategies available out there utilize support and resistance.
Another great thing about support and resistance is the fact that it actively works better whenever a higher time frame is encountered in a daily chart. But to be able to maximize the advantages of support and resistance, you need to make sure that you can fulfill this one particular trading rule. The rule is, the price must be in the near past of the support and resistance.
RSI Overbought and Oversold Strategy
Relative Strength Index (RSI) is a momentum oscillator responsible for measuring the momentum of the movement of prices and the strength. You must take note that RSI overbought and oversold is not considered a trading signal. But if you combine it with price action, you can definitely gain something good over the financial market.
The Bottom Line
Every trader wants to learn the secrets of being highly profitable. But in reality, there is no such thing as secrets. If you have some sort of knowledge in the forex market then you will get to understand that there are actually no secrets. What’s there is a wide gap that separates successful traders from those at the losing end. This gap is thinking. The thinking of successful traders is totally different from new traders because they are honed with years of experience.