Forex Tips - Why You Should Consider Trading The End Of Day Charts

Most people who start trading forex automatically rule out the idea of trading the daily price charts. This is because they prefer the fast pace of the short term charts such as the 1 minute and 5 minute charts, and prefer to try and make quick profits instead. However the truth is that you can make a lot of money trading this particular time frame.

Don't get me wrong, it is possible to do very well trading the short term charts. However it is one of the hardest ways to make money from currency trading because if you watch the markets every day, you will know that they move around very quickly and often in a very random fashion. There is generally too much noise to make money consistently, regardless of which system you use.

The only method I have found profitable on these shorter time frames is to trade early morning breakouts. This is where you wait for a narrow ove
ight trading range on one of the major pairs, and then trade in the same direction as any subsequent breakout, using pivot points for additional guidance. Although I have to say that even this method is not always that reliable.

That is why it is much better to use the longer term charts, and the daily chart in particular is quite a good choice because so many other traders trade this time frame as well. This means that technical analysis works really well because everyone is watching the same price levels and the same indicators. It should be pointed out that these indicators work much better on the daily chart than they do on the 5 minute chart, for example.

When you are looking at the fast paced 1 minute or 5 minute chart, the price flies over the place, seemingly at random. On the daily chart, however, it can look as if it's hardly moving most of the time, which is why you only really need to check this chart at the end of each trading session, when the latest bar / candle has closed.

This is a much more relaxed way of trading but you can make just as much money. For instance when day trading you will probably be making profits in the region of 5-10 points per trade, several times a day (if you are lucky). However you can make just as much profit, if not more profit, by trading one single position on the end of day charts.

You just need to wait for the right trading conditions to be met on one of the major currency pairs, whether you are swing trading and looking for a price reversal, or whether you are waiting for a possible breakout, for example. If you use certain indicators to help you, then it can be quite easy to find winning trades, and the beauty is that you only need to be at your computer for around 10 minutes a day (at the end of the trading session).You can set your target price and stop loss and let the trade unfold in it's own time.

So the point is that the daily charts can be a lot more profitable than the shorter time frames. They are a lot less stressful and the price moves are far more predictable because many of the technical indicators are a lot more reliable. Therefore I would recommend you try and trade these charts if you are still struggling to make money trading the intraday price charts.