The Truth About Trading Daily Timeframe Nobody Tells You

Last Updated on April 23, 2020

Trading daily timeframe is not exciting to most traders.

It is slow.

It requires a ton of patience.

It has fewer trading opportunities.

Still…

Trading daily timeframe is the answer for most traders (with many “hidden” benefits) — especially if you have a full-time job.

Here’s why…

The truth about trading daily timeframe

You might not know this but, trading daily timeframe offers many benefits not found on the lower timeframe.

I’ll explain…

1. You’re more relaxed and make better trading decisions

Let me ask you:

Have you ever traded on the 5mins timeframe?

Then you’ll agree it can be stressful because a new candle is formed every 5minutes.

You’ve got to make a decision to buy, sell, hold, or stay out in a short period of time.

This means you have less time to think which cause you to make wrong trading decisions (like chasing the markets).

On the other hand…

If you trade the daily timeframe, a new candle is formed every 24 hours.

You have more time to think, plan and execute your trades — so you’re less prone to making the wrong trading decision.

The end result?

You make better decisions, your results improve — and trading becomes more relaxed.

2. News events don’t matter

Here’s the thing:

When you trade on the lower timeframe, news events (like FOMC, NFP, etc.) is a big thing.

You’ll notice the price goes “crazy” and flies up and down on your charts.

Here’s an example: NFP on EURUSD 5mins timeframe:

This means if you trade the lower timeframe you must be aware of the news or, you’ll get stopped out for nothing.

But…

If you trade the daily timeframe, then news event hardly matter.

Here’s an example: NFP on EURUSD daily timeframe:

Notice there’s only a small blip on the chart?

You’re unlikely to get stopped out of your trades as your stop loss is wider (and can accommodate the “crazy” swings on the lower timeframe).

So the bottom line is this:

If you trade the higher timeframes, the less impact news has on your trading.

3. You have freedom

Here’s the thing:

The daily timeframe only paints a candle once per day.

So there’s no need to constantly watch the markets because there’s “nothing” to do till the market closes (and a new candle is formed).

Imagine, how much more freedom you’ll have when you’re no longer a slave to the markets?

4. You can compound your returns and grow massive wealth (even with a small trading account)

Now as a daily timeframe trader, you don’t need to spend all day watching the charts.

This means you can get a full-time job and combine with trading to grow massive wealth.

Let me prove it to you…

Let’s say you make an average of 20% a year with an initial sum of $5,000 and you contribute $5000 to your account each year.

Do you know how much it’ll be worth after 20 years?

After 20 years, it will be worth… $1,311,816.

BOOMZ!

5. You can focus on the process and become a consistently profitable trader, fast

I’ve seen many traders who go all in to trade full-time, and fail.

Now it doesn’t matter if their trading strategy works or not because the odds are against them.

Why?

Because they encounter the “need to make money” syndrome.

This is where you break your trading rules (like widening your stop loss) to avoid a loss.

The reason you do it is because you rely on your trading profits to pay the bills — and you’ll do whatever it takes to prevent a loss.

But if you’re trading the daily timeframe, then you can have a full-time job.

And now the odds are in your favour because you don’t have to rely on your trading profits.

Even if you have losing months, it’s not the end because your job will provide your living needs.

This means you can focus on learning how to trade and not worry about whether you can pay the bills.

Won’t this help you become a profitable trader in the fastest possible time?

6. You put the odds in your favour

Now…

One of the biggest reasons why traders fail is because they don’t pay attention to the transaction cost.

And that can be a difference between a winning and losing trader.

Let me explain…

Imagine…

• You have a $10,000 account
• Transaction cost is $10 per trade (buy and sell)
• You place 500 trades per year (from day trading)

If you do the math, you need a return of 50% just to break even!

But what about trading daily timeframe?

Again…

• You have a $10,000 account
• Transaction cost is $10 per trade
• You place 50 trades per year (longer-term trading)

Now, you just need 5% to breakeven — a big difference.

Can you see how transaction cost is a killer?

So if you want to put the odds in your favour, trade smarter and trade lesser.

So, is trading daily timeframe for you?

Now I’ll be honest.

Trading daily timeframe is not for everyone because different traders have different goals.

So, if you fall into any of the categories below, then trading daily timeframe (or higher) isn’t for you.

Trading daily timeframe is NOT for you if…

• You want to generate a consistent income
• You want “fast action”
• You’re into proprietary trading

Here’s why…

Why trading daily timeframe don’t offer you a consistent income

When you the higher timeframe, you have a lower trading frequency.

This means you need time for your edge to play out (possibly over a few months).

So, if you’re looking for a consistent income from trading, this approach is not for you.

Why trading daily timeframe is not for “fast action” traders

Here’s the deal:

Every candle on the daily timeframe is painted once per day.

It’s a slow trading approach for traders who don’t want to be glued to the screen all day.

Why trading daily timeframe is a proprietary trader’s nightmare

The goal of a proprietary trader is to generate a consistent income from trading (by trading frequently).

But as you’ve learned, trading the daily timeframe doesn’t allow your edge to play out fast enough to generate a consistent income

Does it make sense?

Great!

So decide now whether trading daily timeframe is for you.

Because if it isn’t, then you can stop reading and find something else that suits you.

But if you know it’s for you, then read on…

Trading strategy for the daily timeframe

The 2 most common ways to trade the daily timeframe are…

• Swing trading
• Position trading

I’ll explain…

Swing trading

Swing trading is an approach which seeks to capture “one move” in the market.

The idea is to endure as “little pain” as possible by exiting your trades before the opposing pressure comes in.

This means you’ll book your profits before the market reverse and wipe out your gains.

Here’s what I mean…

Pros:

• You don’t need to spend hours in front of your monitor because your trades last for days or even weeks
• It’s suitable for those with a full-time job
• Less stress compared to day trading

Cons:

• You won’t be able to ride trends
• You have overnight risk

If you want to learn more, then go read…

The NO BS Guide to Swing Trading

Swing trading strategies that work

Next…

Position trading

Position trading is an approach which seeks to ride trends in the market.

The idea is to capture “the meat” of the move and exit your trades only when the trend shows signs of reversal.

Here’s what I mean…

Pros:

• It requires less than 30 minutes a day
• It’s suitable for those with a full-time job
• Less stress compared to swing and day trading

Cons:

• You’ll watch your winning trades turn into losing trades, often
• Your winning rate is low (around 30 – 40%)

If you want to learn more, then go read…

The NO BS guide to Position trading

5 Powerful Ways to Trail Your Stop Loss

Now, once you’ve developed your trading strategy, the next step is to develop a routine to ensure your trading success.

Continue reading…

The secret to daily timeframe trading success

(This is important so don’t skip this section.)

Now…

A trading strategy is only one part of the equation.

Because you still need a trading routine or you won’t find trading success. If you ask me, this is the secret between winning and losing traders.

You’re probably wondering:

“So, how do I develop a trading routine?”

Well, there are 3 parts to it…

1. Create and update your watch list
2. Commit to your schedule (execute and record)
3. Review your results

Let me explain…

1. You create and update your watch list of markets

(This can be done on the weekends when the markets are closed.)

After you’ve developed a trading strategy, create a watch list of markets to trade (whether it’s Forex, Stocks, Futures, etc.).

Next, scan through your watch list and identify the markets which offer a potential trading setup (this should be according to your trading strategy).

You want to “mark” these markets so you can focus on them in the coming week.

You can do it on excel like this…

Or if you’re using TradingView, you can highlight it like this…

Next…

2. You commit to your trading schedule

Since you’re trading the daily timeframe, then it makes sense to make your trading decision after the close of the daily candle.

This could be morning, afternoon, or night (depending on where you are) — so create a schedule where you can commit to it no matter what.

For example:

If you’re in Asia, then the daily close would be in the morning for you.

So, every morning you’ll check the markets from your watch list and see if there’s a potential trading setup.

If there is, then you move onto the next step…

3. You execute and record your trades

Now if there’s a valid trading setup, you execute the trade with proper risk management.

Then, you’ll record the metrics like…

Date – Date you entered your trade

Time Frame – Time frame you entered on

Setup – Trading setup that triggers your entry

Market – Markets you’re trading

Price in – Price you entered

Price out – Price you exited

Stop loss – Price where you’ll exit when you’re wrong

Initial risk in $ – Nominal amount you’re risking

R multiple – Your P&L on the trade in terms of R. If you made two times your risk, you made 2R.

An example below:

For the full breakdown, check out this post below…

How to be a consistently profitable trader within the next 180 days

4. You review your trades and find your edge

Once you’ve executed 100 trades consistently, you’ll know whether your trading strategy has an edge in the markets.

Here’s how…

Expectancy = (Winning % * Average win) – (Losing % * Average loss) – (Commission + Slippage)

If you have a positive expectancy, congratulations!

It’s likely your trading strategy has an edge in the markets.

But what if it’s negative?

Then you apply my AFTER technique…

1. Identify the patterns that lead to your losses — and avoid trading these setups
2. Identify the patterns that lead to your winners — and focus on these setups
3. Tweak your trading plan according to your findings
4. Execute the next 100 trades with your updated trading plan and record the trades
5. Review your trades

If you do what I just shared, you’ll improve your trading results and eventually, find your edge in the markets.

Now…

Whether you’re a winning or losing trader, the AFTER technique can be applied to you.

If you’re a winning trader, then it’ll take your trading to the next level.

If you’re a losing trader, then you have a method to get yourself into the green.

Conclusion

So, here’s what you’ve learned:

• The benefits of trading daily timeframe — you’re more relaxed, the news doesn’t matter, you have freedom, you can grow massive wealth, and you put the odds in your favour
• Trading daily timeframe is not for you if you want a consistent income or you want a career in proprietary trading
• You can adopt a swing trading or position trading strategy on the daily timeframe
• Your trading routine consists of creating your watch list, committing to your trading schedule, executing your trades, and reviewing your trades

And there you have it!

The truth about trading daily timeframe that nobody tells you.

Now here’s what I’d like to know…

Do you trade on the daily timeframe? Why or why not?

Leave a comment below and share your thoughts with me.