Why You Need to Trade on a Daily Time Frame

Many beginning traders started their misadventures by bleeding out the content of their deposit while trading on smaller time frames (below H4), just because they thought that smaller time frames yielded faster signals.

Many beginner traders started their misadventures by bleeding out the content of their deposit while trading on smaller time frames (below H4), just because they thought that smaller time frames yielded faster signals.

Well, it's true that smaller time frames gave faster signals, each new candlestick drawn out by short intervals, be it in each hour or each minute. There you go, you got prolific charts triggering many of your indicators signals.

Those signals, however, may lead to more harm than good if you can't tell which one is actually making the difference as it could turn out to be another distracting fake signal. You already place a position based on that confusing signals and the next thing you know the market went against your prediction.

As such, there are some disadvantages that you can avoid just by adjusting to daily time frame:

• Extrem urge to overtrade
• Obsession with the charts
• Over-analyzing every price movement, crucial or not.
• Doubting your accuracy in analysis
• Inconsistency

To elaborate on each point above, let's move on to the next section.

Daily Time Frame Saves You from These Problems

If you experienced any of these issues while rolling in the deep with small time frames, help is about to come your way:

• Overtrading: more signals from small time frame tickle you to open more positions. Unless you're trying to make small gains from frequent tradings, don't expect to get rich overnight.
• Trading obsessions: times keep rolling while you glue yourself to monitor trying to capture every signal coming from short time frames. You will miss out on social occasions with your family, friends, or co-workers.
  
  
• Over-analyzing: layer upon layers of indicators and hours spent analyzing each one of them, it's very exhausting, and you start to make mistakes.
• Self-doubts: mistakes lead to losses, and you started to doubt your performance and decisions. The very next time a signal occurs, you can't be sure whether to open a position or not.
• Inconsistent trades: You came up with good wins but then got some severe losses that erased your earned wins.

Benefits of Trading on Daily Time Frame

You can help yourself by starting to trade in the daily time frame, here are the reasons:

• Daily time frame prevents overtrading, fewer signals don't mean less opportunity, it smooths out all the noise in the market by producing accurate signals.
• You don't have to keep watching all the signals from small time frame anymore, you can limit it on a daily basis while resuming your social life.
• If you understand how simple price action works, you can start taking off all the unnecessary indicators and reducing the time spent watching your monitor.
• Simpler and clearer signals produced by daily time frame will help you to regain confidence in where you should open and close positions.
• Accurate signals lead to effective trades thus resulting in consistent trading.

Best Daily Time Frame Trading Setup

If you accept that less but more accurate signals from daily time frame benefits your trading preference, make sure that your broker displays their daily time frame in the New York Time Close format.

The NY Time Close format follows real trading session close, which displays 5-day charts instead of 6-day charts. This is an important note due to the fact that 6-day charts (additional Sunday bars) deployed by some brokers may lead to fake signals.

Your Trades, Your Style

This article is not intended to dictate your trading style and preferences, you may resume your trading system by utilizing short time frames if by all considerations is more beneficial to you than using daily time frame.

Points concluded: It's a suggestion especially for beginner traders when they want to figure out what worked best for them.