He has a monthly readership of , traders and has taught over 20, students. Trading the 5 minute chart and other lower time frames decreases your chances of success and is widely considered gambling: I am going to tell you guys something right now that you may not have thought about before…you only need 1 big winning trade a month to be a successful Forex trader. How is that possible you might ask?
Some of you probably even know that this over-involvement with the market is why you are losing money regularly or struggling to keep your head above water. But, the cold hard truth of the matter is that you will likely never be a successful trader until you first break this addiction…. Now, here is why I firmly believe that trading lower time frame charts is a waste of time and money.
Trading a 5 minute chart stimulates the reward centers of your brain…it gives you instant gratific a tion. Having patience and discipline to focus ONLY on the daily charts takes more effort from your more highly-evolved bra in areas. So, the point here is that traders who are addicted to trading a 15 minute chart are actually addicted to the feeling they get from entering the market, and this means they are unable to use their more advanced planning and long-term brain areas effectively.
I have personally only met a few day-traders who make money consistently, and they almost all seem really frazzled and strung-out, like a junky who cannot stop thinking or talking about their drugs the market. To focus on daily chart trading you need patience and mental fortitude, this takes intelligence and forward-thinking, it takes checking your ego at the door, and it takes a realistic attitude.
I get this email almost every day: So let me set this straight for you guys right now: Through position sizing, you can trade the daily charts just fine on a small trading account…you just have to trade a smaller position size. This all contributes to a poor trading mindset and ultimately to you losing more and more money.
Look at this chart below of the daily spot Gold market. This trade setup was clearly with the existing up trend, it was well defined, and formed near two areas of support…. The point is this…if you wait patiently and hit one big winner like this a month, you are doing very very well. Understanding the overall daily time frame bias of the market is very important for trading the daily charts and the 4hr or 1hr charts too.
While the amount of money you risk per trade is a highly personal decision that depends on your individual financial situation, trading the daily charts can allow you to risk a bit more per trade than trading the lower time frames.
However, keep in mind, this obviously only works if you can remain disciplined enough to not jump back into the market on revenge after you have a losing trade. One thing I firmly believe in is that Forex trading success is largely a result of the quality of the trades you take…not the quantity of trades you take.
By simply reducing the frequency with which you trade, you will simultaneously improve your odds of succeeding over the long-term. You need to understand and accept the fact that 2 or 3 quality trades a month is going to put you much further ahead than 20 or 30 emotion-fueled impulse trades a month…no matter how good it makes you feel to take them.
Remember, the tortoise won the fabled race because he was slow and consistent, instead of fast and full of emotion like the hare….
Trading success is a direct result of the way you think about the markets. It takes consistent control of your emotions and actions in the market to produce consistent trading results. There is no sure-fire way to eliminate the temptation of the lower time frame charts, but if you re-read this article and some of my other Forex articles , you will reinforce the reasons why taking a slower and longer-term view on the market is the quickest way to making money as a trader.
The daily chart time frame is at the heart of how I trade and how I teach; my price action trading strategies and my overall trading philosophy revolve around taking a calm and stress-free approach to the markets. I know what I am looking for on the charts, if it shows up, I enter the trade, if not, I walk away from my computer. Indeed, trading is the ultimate test of self-discipline and will power, and the more you develop these abilities, the more you will find that the profits you seek from the markets are not so elusive after all.
I used to trade the lower time frames heavily made money too but I was stressed and found myself thinking about charts all day. I found higher time frames by accident and never looked back.
I still lose traded but not as much and I feel so much better. I have not yet began trading but am studying my different options for executions. This seems so true because back in my poker days when I used to play a bunch of hands for small wins id end up playing a bad one that lost all my wins and my payroll. Where as when i was patient for my good hand id win the amount of all those small pots together and more without all the little and big losses to follow.
So i definitely notice a big connection between these two games and the philosophy of patient play versus quick and impulsive ones. Because I am currently learn and the immediate switch from 1m to 1d charts looks very difficult from my point of view… Thank you,. Nial, I love this article particularly, and I have read many. I first started trading a little more than a month ago, and following your advice, I quickly started to realize great, consistent profits trading the daily charts.
After research, study, and practice, I would reap great profits in 15 minutes or an hour on the 15m or 5m charts. Then, I would have an equally bad or twice as bad losing streak the next day. Reviewing my demo account, I noticed that my most profitable times were with your strategies on the daily chart, so I decided to revisit your website and see what you had to say on the subject. Low and behold, I was suckered into impulsive gambling by the allure of quick profits without realizing it.
I went in with the best of intentions, lead by curiosity and greed. My true aim is self-control and iron-clad willpower, so I will be returning to the daily charts, implementing the strategies as you have described them. Resources like yours enable people to climb out of soul-sucking wage labor. U are so on point. Av blown my account severally bcos i didnt know which time frame to really trade. Always boxing up everything but now as am preparing to hit the fx market again and very sure to blow after trainings like this.
Thanks for the lesson. The seductive shorter time frames are a real trap. Really appreciate the importance of changing my midset and using the daily charts as a baseline.
Hi Nial, I am trying to comprehend what exactly you meant here and will appreciate you could help me with this matter by answering the below questions: Monitoring 10 instruments 6 times a day on four-hour charts translates into 60 times analysis on one single trading day that could be really drowning, whereas dealing with daily charts downscale it to 10 analysis a day, if I am correctly getting what you have been trying to say.
I perform analysis on daily charts at the end of the New York session and I check live trades a couple of times per day. Everything Nial mentioned in this article is true. Really good advice, but you have to wean yourself off the lower time frames first. I would never trade anything, but daily chart trades. Nial nial nial ,Thank you very much, You have been such a great inspiration for me,as I am started to trade for 6 months , keep the good work , one day I will come and see you.
I just started getting in to trading and coming across this is making me doubt my strategy. Is it possible to still be successful on a smaller time scale? I have been trading on a 4 hour, 1 hour, and 15 min scale depending on if I am looking for a trend or entry, then set my stops accordingly. Jesse, I am not a fan of short time-frames, I much prefer the higher time-frames eg: This is probably one of the best articles I have read about fx trading.
Nial you are spot on here man. I have found no success with the 5 min b. I will admit this fault and change it today. I can tell by your comments that this article stuck a cord with a lot of us traders. Much success to everyone on this board that seemed to absorb this information so well.
Hi why there different day chart for different trading platform also different chart for different timezone. Even though forex market opens same time all over the world. Trading platform opens a dayily candle midnight base on their respective countrys timezone.
I am quite confused the signal i can see from Uk might be different from the signal a trade sees from Us or far east.
Please can you explain. This makes a lot of sense. Almost every trader I know trades the M And every trader I know loses money. The lower time frames are just chaos and noise. The D1 is crystal clear or pretty damn close! Still trade D1 and go find something else to do for your kicks!
A Hameed from Dubai and newbie in forex trading wondering how to learn fundamental skill to become a professional trader. Indeed your great and down to earth research and knowledge is empowering me to learn step by step. Your articles are incredible resources for us to go through the career path. Wish you best of luck! I had the same experience when I was using the lower time frame. Thanks a lot Nial for your art of writing of all your articles. Keep up your good work. Very sound and logical article.
I sometimes wonder are there any 5min chart winners at all! Cuz one day I was tired of gambling and decided to long silver cuz it was a hot topic and the daily chart was bullish. I had no bs tight stops and bought very little amount. Very frank, but the 1st sentence hit home with my experience. Being blunt is probably the quickest way to learn. Great comment Nial, the best Id never read on forums… since I began to trade with 1d, I trade with 12 hrs as well all was changed.
I think some people will be able to trade properly just reading your post, and no time later like me! I will keep and recommend this site to newbies.More...