Chris taught me to trade the candlestick signals and patterns when I couldn’t even turn on a computer. Maybe the reason of my success was that I knew nothing before and I fully trusted Chris and followed what he said exactly. I merely did what he told me to, nothing more or less. I never thought that I was smarter than him and I could trade better than him, because it was stupid to think like that about someone who was much more experienced.
If I trade a little differently, it is because I spend more time on my trading, whereas Chris doesn’t like to do that. In spite of this, I still do exactly as Chris has taught me, because it works.
I enter based on the daily candlesticks. Of course I also take the weekly and monthly trade setups. But my daily trading routine is based on the daily chart: I Trade the Daily Chart, But I Am a Day Trader
Chris only follows some of the very special and strong candlestick signals and patterns, but I also trade some more signals that have been also taught to me by Chris. But it is several years that Chris doesn’t trade those patterns anymore, because as I said he doesn’t want to spend more time on his trading business.
Today I am going to tell you something even more important than my trading system. I check different sites including LuckScout and I see that although it is always mentioned that trading shorter time frames and things like news trading are wasting of time and money, still many traders try to trade the shorter time frames, or get in the markets right when the important news are released.
I know you are in rush to make money, but if you really want to make money you have to stop following the shorter time frames. Having more trade setups and opportunities through the shorter time frames doesn’t mean more money within a shorter time. It means more losses and headaches.
If you like to make profit consistently, the most important thing you have to do is that you only follow the daily and longer time frames. I know something in your mind says it is too boring to wait one day, week or month for a candlestick to close. Yes, you have to wait for 24 hours for a candlestick to close on the daily chart, but when you check several currency pairs every day and a couple of them form a trade setup, you will have even more trading opportunities than following the short time frames that make you sit at the computer for several hours per day.
It is good to know that I enter even earlier than a 15min chart when I trade the daily chart, which means unlike most traders think, trading the shorter time frames doesn’t equal entering earlier and with a better price. How is that possible?
Sometimes, when I make a good winning trade, I refer to the shorter time frames like 15min to see how I would take that movement if I wanted to trade it based on the 15min chart. In most cases, I not only have a better entry (although I enter the market after the daily candlestick close), but I make more profit compared to the trade setup the 15min chart forms.
It is not only that. If I wanted to trade the 15min chart, I would have to sit at the computer for several hours waiting for a trade setup to form. And most probably I would miss the setup because I would fall asleep in front of the computer 🙂
Let me show you one of my most recent trades (this article was published originally on Dec 12, 2016).
One day, I took a long position with EUR/USD. I don’t say why, because I don’t want to talk about the trade setup in this article. There was a long trade setup for me based on the candlestick signals on the daily chart. After I entered the market, EUR/USD went up for about 145 pips. I get out with a good profit, but one of my positions was still open while the stop loss is moved to breakeven:
Now let’s see how I would trade this up movement if I wanted to follow the 15min chart.
There was a resistance line on the 15min chart. If I wanted to trade with this time frame, I would wait for the resistance line breakout, because candlestick signals can hardly be trusted on the short time frames like 15min chart. As you see, there is no reliable candlestick signal on that period of time (the below chart).
If I had entered after the resistance breakout, my stop loss would be triggered, because the price violated the line after its breakout when it retested the broken resistance. So I would have a losing trade first:
Then I would have to adjust the resistance and wait for another breakout while I would have already entered at 1.2423, which was a much better price, through the daily time frame:
So finally I would go long and could catch a 90 pips upward movement. But the question is how many hours I would have to sit and monitor the 15min chart and then enter with a price that was tens of pips higher and would make a much smaller profit for me?
The resistance breakout formed 68 candlesticks after I went long based on the daily chart. It means the 15min charts’ long trade setup formed about 14 hours after. Could I sit at the computer for 14 hours? I would miss the setup definitely. Besides, I could not be able to catch a 140 pips movement, and I would have a losing position before having the winning position too.
What Does It Mean to You?
It means trading the shorter time frames doesn’t mean more trade setups and profit. It can even result in more losses and smaller gains. Trading the shorter time frames means sitting at the computer for several hours per day and missing many of the trade setups.