How to Trade FOREX from Just the Daily Charts
Trillions of dollars worth of currencies are traded on the FOREX every day, yet most aspiring traders are frustrated about how to trade the FOREX from just the daily charts. Fortunately, there is a simple method that offers several trade opportunities during the week when FOREX price action begins to contract within a close range. Like a blocked water hose that is building pressure just before exploding so does trading contracted FOREX price patterns as they explode into runaway moves.
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Instructions
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Spotting Runaway Forex Moves
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1
Log on to a free charting service, such as FreeStockCharts.com. Press the "New Chart" tab twice and two price charts will pop up on your screen. Designate one as your quotes chart and input all the symbols for the FOREX currency pairs on it. The other price chart will be your price chart that will display the price action for the currency pairs on your quotes chart. Link the two charts by pressing the upper right-hand corner link, which when you scroll down the quotes chart, the price action for the currency pairs will appear one-by-one on the price chart.
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2
Click the Indicator tab on your price chart and select the "Trading Volume" indicator, which will appear on the bottom of the price chart. This indicator will reveal buying or selling volume for the currency pair on the price chart. This will help you gauge demand for the FOREX currency pair and time your entries.
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3
Scan through the different currency pairs and take note of any upward trend where price action appears at the bottom left-hand screen of your price chart and travels in the direction of the upper right-hand screen. Mark down any currency pairs that have this type of price action. This will be your high-probability trade list for potential entries.
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4
Take note of any contracted price action where the price is trading near the top of its trading high but the price action is trading between two very tight price points. Typically, you want to see this trading range over the course of 13 price bars or higher. Also, you want to see a decline in trading volume which means that traders are not sure whether to take the currency pair higher through more buying and waiting to see what will happen themselves. Take note of the two price points wherever you see this pattern.
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Prepare to enter the trade when price begins to trade up through the top of this price range on higher volume than the preceding volume bars before price became contracted. Place your stop at the bottom of the price range and take your profits at three times your initial risk.
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Tips & Warnings
When you spot these types of tight trading ranges that are trading near the top of their trends, be ready to act quickly. These moves are explosive and you have to act quickly. In time, you can time these moves with great accuracy. It is worth the effort in learning to trade these explosive moves because they are very profitable in a short amount of time.
No trade setup is guaranteed, so be sure to know your exit before you know your entry. Amateurs often dream about how much money they can potentially make on a trade, but professional FOREX traders know their exits before they ever enter. This emphasis on exiting a position at the right time is the hallmark of professional speculation because there is no second guessing, which makes it easier to move on to the next trade regardless of outcome.
