Price action Forex strategies lend themselves really well to daily chart Forex trading, but so many people ignore these simple techniques in the quest for more elaborate trading systems that will have them sat in front of the computer all day long. Yet you can be a professional trader on less than one hour a day, and you can have the rest of your time to enjoy life, or you may even decide to keep your day job!
99% of the people, come to Forex for easy money or so they don’t have to sit at their desk being told what to do all day long. But after a short time in the markets most traders are doing way more hours than they did at work, and they are probably a lot more stressed out as well. Trading ends up turning into a nightmare job and eventually it becomes too much and the trader quits.
How to use Daily Trading Charts
Most people head straight for the 5 minute chart and cover it with rubbish indicators and then hope to make money. They totally miss the opportunities that lie in the longer timeframe charts. Candlesticks on the 5 minute chart don’t mean much, but candlesticks on the daily chart do! They are a complete log of each trading day, and at a glance we can see what happened on a particular day in time. Of course the one we are most interested in is the most recent candle, it can show us the sentiment that is in the Forex market from the 4 things it shows, the high, low, open and close. These 4 pieces of information are nearly everything you need to make money in the markets, and this is called price action.
Price action is very simple, and a particular candle formation is a really profitable trading strategy. The pin bar is my favorite price action signal. It is a single candlestick pattern which is basically a candle with a long tail. This tail show rejection of certain prices and can give us the chance to trade in the opposite direction to this rejection. Pin bars are also called hammer bars and shooting stars.
They show us that during the day price moved steadily in one direction for perhaps a 150 pips or more, and then for whatever reason, be it news or technical reasons, the majority of traders changed their minds and exited, reversed or entered fresh new positions and drove price back to the opening price of the day, and all the better if they passed the opening price. This fresh new momentum usually lasts for 2 or 3 days and provides us with high probability trading opportunities.
Pin bars are best traded with the trend and my favorite way to do this is to wait for price to break a support or resistance level and then retrace and test this level again. If support was broken, it will then become resistance, and vice versa if resistance was broken. This is called a change in polarity and these are the bee’s knee’s!
Test this strategy using 30 USD account from XM:
When the chart all lines up with momentum, a key level and a pin bar we have an awesome trading setup that I will jump on usually. However like all things in trading nothing is guaranteed, some pin bars don’t work out and you will lose trades, but so long as your winners are bigger than your losers you only need to win half the trades you enter and you will make money.
If you are fed up looking at five minute charts and sitting all day at your computer, have a look at daily chart trading strategies involving price action, they are extremely profitable and you don’t need to sit at you computer for hours upon end getting know where. You could end up only spending 10 minutes per day at the close of the day looking at your charts setting your orders and then walking away. This is the stress free way to trade, and I know because I have done a lot of scalping on 30 second charts in the past!
There are plenty of free resources out there and cheep books to learn from. Give yourself time to learn and you can get there. You can also visit my free website which covers all aspects of trading including price action, psychology and how to build your trading plan.
If you want to get more Forex knowledge, we advise you to check our best Forex books page!