One of the main conflicts that traders have with themselves is how they are going to organize their time. Work-life balance is one of the key figures in our lives. Without the schedule, our trading could be stressful and compromise our productivity. Ultimately, if we are not careful, it can lead to over-trading, dullness, information overload, and burnout. So if we want to have any chance of winning in the forex industry we need to go outside of conventional thinking. A constant sea of conventional thinking is always there but if we want to vault ourselves into that fraction of a percent where we can improve our trading, we need to reconsider which is the best time frame to trade forex.
As we all know, by time frame on most charting platforms we can trade the 5 minutes chart, 15 minutes, 30 minutes, 1 hour, 4 hours, daily, weekly, and the monthly chart. These charts are the most common depending on the platform we trade. So where we can search for the best chance of winning? Word winning has a different meaning for everyone. What we might perceive here as the winning in forex is consistent profit. Consistent profit over and over to the point where we go long-term and look 12 months after we started or 12 months after we started keeping track. Are we at a consistent well-organized path to where we can trade real money and make a good living off that? Are we trading with good enough results to where somebody can notice that and hire us? Or to a lesser degree, are we increasing and improving at a good enough pace to where we are going to get there soon? That is the winning according to professional traders. So the best time frame to trade forex if we want to win consistently might be the daily chart. Why do we believe that the daily chart might be the far superior chart to trade forex? There are 4 main reasons for this statement. The first reason, everything on a daily chart, every technical tool works better and more consistently than any other chart out there.
Even if we use some not that good tools like the RSI indicator or trend lines, they work better on the daily chart then they do anywhere else. In other words, trades win more often. If there’s any constant in all of this research among traders is that every single time the daily chart turns out to be more consistent than any other chart. The second reason, why the daily chart might be the far superior time frame to use is that we don’t have to be slaves to the markets. Trading does not suppose to be super long, we could just turn on our charts, look at all currency pairs, our algorithms, and the system that we put together tells us one of three things. Either we make a trade, manage a trade we’re already in or we do nothing and move on. That is how it supposed to be and after we can do whatever we want because we want to achieve a great life-work balance. So some traders who trade on 5 minutes or 15 minutes chart might be trading a lot longer than someone who is trading on the daily chart because they want to get in and get out and make that quick money. How quick is that money really? The market doesn’t always start moving when we think it’s going to so there can be a lot of waiting.
Sometimes there are days where the market just never gets off the ground therefore it could be a lot of waiting for nothing. The forex trader life can be nerve-racking and horrible or it could be blissful, wonderful, and rewarding. The third reason, why the daily chart might be the best option is that news events matter a lot less to us than before. What do we mean by this? Well, on one hand, if we are trading smaller time frames news events on particular currencies that don’t even have a lot of significance can disturb our trade instantly if they don’t go our way. On other hand, the news event might actually be in our favor but for some reason, banks could decide to take opposite way even though the news event was good so we could easily find ourselves in a helpless feeling of sitting behind our system and scratching our head after a losing trade. If we manage to get those feelings out of our trading, life could be much better, it’s going to be a lot less to worry about.
Essentially, we don’t have any control over those news events. The news events are killers and if we have a chance to avoid most of them and if we are able to sidestep most of them that could be a great addition to our daily chart routine. Going on further, we will try to reveal the fourth reason why we might trade the daily chart exclusively. The big banks of the world, the people who are responsible for moving prices up and down employ traders that go to work every day for the purpose of moving the market against the popular side to knock those orders out and put that money back into their pockets so they could redistribute it back in the market and make the price go up and down. Professional traders claim that banks are doing this over and over every day and because of that the daily chart traders might be less exposed to these financial earthquakes than for example the 15 minutes chart traders.
Why? Because there’s a lot more of 15 minutes chart traders and they are trading all the time which means there’s an endless supply of traders out there for the banks to take from. The same reason why Las Vegas casinos are making tons of money on slot machines because there are always people there pulling that lever and hitting buttons over and over again regardless of how much they are actually wagering. It is important to mention that according to our knowledge the weekly chart and the monthly chart time frame do not perform better than the daily chart. Simply, the weekly chart time frame contains too many huge news events where we can no longer avoid them so there might be a big risk for us to ruin our trade. There can be thousands of pips in this time frame so it is highly questionable is it worth it.
For those who are skeptical about the daily time frame, there’s a solution. They can try to do both at the same time and compare which one can give us better and more stable results. If both works, then perfect, we could trade in both time frames. In the end, we will never have control over the market but we concluded that forex trading is such a rare combination of things where we can have a large impact and somewhat control the outcome. If we set things the right way we might have some measure of control and we believe that the journey starts where we can eliminate things that we cannot control. The daily chart might be the right way to get things done as we all want them and be closer to our central mission of becoming the best traders that we could potentially become. Hopefully, in the future, we can attack the market with more confidence.