Why I trade daily charts only

I have traded on different time frames in my trading journey. I have traded one minute charts, 5 minute charts, 15 Min charts, 30 Min charts, 1hr charts, 4hr charts, 12hr charts and daily charts. I have not done weekly or monthly or annual charts yet. However, in my experience, the daily charts are better for the following reasons.

1.        Clear entry and exit signals

Compared to other time frames, the entry and exit signals are less on daily charts but more pronounced. I have realized that on daily charts, you may get less than 10 trades in a month yet on say 4hr charts; you would get even up to 20 trades in a month or even more if you are on a 1 hr. chart. So there are obviously more opportunities on the 4hr chart and 1hr. However, the entry and exit signals are clearer on the daily charts as compared to 1hr chart and 4hr chart. 

 Freedom to do other things in life (it’s the main reason I fell in love with forex) 

Who says traders have no other life outside trading? One of the reasons I love trading is the freedom it gives me to do other things. Trading gives me freedom to teach others. It allows me to spend time reading and writing on this blog. It allows me time to go for all activities that I consider important to me. And while doing all those, I still trade. Definitely as a scalper, you cannot do that. Even 4hr charts don’t give you that much freedom though they are much better than lower time frames. 

2.        Limit on over-trading

By default, trading daily charts limits the amount of trades you take unless you are not following a trading strategy. Even those using indicators on daily charts find that they have few entry points as compared to lower time frames. So by default, you are limited to the number of trades that you take hence avoiding over trading.

3.       Cuts out the noise

Trading can have noise. Every trader knows how speculators are like witch doctors. They have a reason for everything that happens in the market. Many traders keep glued to CNBC and other news programs with the hope of getting to know  the direction of the market. There was a time  I really wanted to install CNBC - so that I  could follow all news items. 

The beauty about trading daily charts is that all the news items and alerts are factored in at the end of the day. It really chops out lots of noise that would otherwise take lots of a trader’s time hence taking away the freedom to do other things in life. 

I am not saying that one should ignore news when trading daily charts. Never.  I always try to stay clear of the markets when I know major news items are going to be released. If I am holding a position, at times I stay in that position even when the news items will be released. It’s really a judgemental call, a skill, one of those things one has to learn and get better at it with practice and experience.