Trading for living only using daily charts or higher...

Dear Friends,
As I start learning to trade, I see, recognizing trend and trading using a daily chart to be much easier than trading with 1 hr chart or lower. Clearly, this would mean less pips compared to day trading. I was wondering, is it practical to make a living out of trading just by trading daily charts. For a minute, if we assume this is possible, practically, you would be spending an hour or so, every day to make a living

Appreciate any inputs from the senior traders in the forum and others who might already have achieved it.

Many Thanks in advance,
TradeStar

It is possible and many people do it, but you cannot do it with the average US$10K intraday-trading account. Longer time frames require in my opinion beefier accounts.

One could make a living off of a daily chart.

Once you get the ball rolling it could be profitable.

I agree you will need a significant amount of capital to begin and maintain your targets will take weeks or months to achieve and the drawdown will be scary big at times.

If you've got the capital and the STONES trade-on and good luck

here , i can survive with $150 a month with decent food and a bath twice a day.... $500 and family of four & a car can survive......

it is depend on your standard of living.... and your way of living

This is certainly possible but it depends on how much you need to make a living and that in turn requires how much you would need to fund your account with.

If you need £2,000 per month to make a living and you think you can return 5% a week on average (which I personally think is feasible) then you need to fund an account with £10k.

But you should also consider that you should look to return more than you need so that you can not only pay your wages but increase your pot to make things easier in future.

If you are leaving work and considering trading then I can give you some useful advice, since I have done this and it proved to be a big mistake at the time.

a) Make sure you are fully capitalised. That means working out, as described above, how much you need to trade.

b) Make sure that you have a cushion of at least six months salary minimum. This takes some of the pressure off - trading off of daily charts often requires large stops which in turn results in more risk and you get less signals so finding very good setups requires a huge deal of patience. If you feel you have to consistently make money, you are much more likely to take bigger risk or trade more frequently which is the reason why many traders fail in my opinion.

c) Have a plan so that you trade with confidence. Know what setups you are looking for, how much to risk and how often you expect to win.

d) Make sure you structure your day in advance. This is vital. When you are only spending an hour a day working (studying the charts) you may soon become depressed and disillusioned. Believe me when I say that I was desperate to leave my boring 9-5 and become independent. Within five months, I could hardly bear waking up each day at home in my flat with no one to talk to and no one to see.

Hope this helps,
Tom

Yea, but how much is the soap? I bet that will break your budget.

I have been able to move to full time trading. After trading 1 hour and 15 minute charts it has become time to trade higher TF's. Moving to 4 hr has been a pretty easy transition and there are still swings to trade if you get bored or just feel the need to push a button more often.


PT

ROI of 5% weekly, week on week, year on year is tough to achieve. PowerTrader, to do what you suggest, handle the drawdown and draw £2000 per month would need an account of £20,000+ IMO. Preferably, substantially more. The ROI being half what Tom feels is feasible. If you achieve the higher return, great, but you need some slack and you must not be under pressure to perform in any market, especially forex.

If you are under pressure you may get out of too many trades at a loss - trades which do become profitable if it wasn't for the early exit - and not let your profits run by exiting too early so you can put a lump of meat on the table at the weekend. Good luck in whatever route you choose.

Agreed. 100%. Being under capitalised causes most "traders" to fail before they get started.

amen! the pressure i personaly consider as an expectation what blurs the real observation of current happening.

Human mind. builded on observatios of charasteristic behour what can be memorysed.

While I mainly trade the 3h charts on oanda, I know two people that make their living on daily charts (for most of their capital)...They catch the big swings and can pull in thousands of pips on one trade if they have a good run...I find that the dailies are more stable so you can use higher leverage, so the answer is yes you can make a living on the dailies and it may even be easier then day trading.

Thanks to all of you on contributing.

I just started trading 3 months back. Basically, trading mini account ($1 per pip) with 1 hour or 4 hour charts. If I look back, out 50+ trades attempted, roughly, I had 30+ wins and 10+ losses. The sad part is, specific 3 out of those 10 losses, swallowed all the profits and the capital (:
Essentially in those 3 trades, somehow I thought, the trade will turn around it never did until I gave up. Believe me, it started going right back up, even into profits, immediately after I got rid of it(:

Of late, thanks to this fantastic forum and the very kind traders, I started looking at some strategies and hedging techniques and put together some combination on my own trading only day charts.

I draw 14 days high/low smas and once the price closes above or below take the trade in that direction (only if that is direction of the trend) and adapt Jacko's hedging, if the price crosses the other side of the tunnel.

Looks OK on the past 3 trades. Only issue is, I still lack the courage to let the profits run. I wake up and see +pips and bang, I close it and it continues to go up..

Once I stabilize on being consistent using day chart, I thought doing this for a living could be an option. Hence my thread.

Thanks again to all my lovely friends here

BTW, I love that 'soap' joke. True. at $150, soap can indeed break the budget

TradeStar

Trading daily charts is definately possible, technically it's not much different then trading lower time frames. If you look at the charts, they all look more or less the same. And dynamics are very similar. Don't take this word for word, as obviously tick charts and monthly charts are very different, but that's an extreme.
One thing to remember is that you still have to stick to 1-2% risk rule. Risking more will kill you unless you are very good at what you do, even then, one day... So keeping this in mind, you will need a large capital to make a decent living.
+ve side of long term trading is that you don't have to worry so much with slippage and spreads as they would represent only a small % of your profits.
However, there are still weekend gaps to consider
Overall, trading long term is less stressfull and thus it should be easier. Major hurldles for day traders are the spreads and slips, which are usually multiplied by overtrading. So you would be on a safer ground trading the daily charts.
For me, it's far too slow, but that all depends on your personality and goals.
Best regards,

Vlad

I would like to comment on this because I think a lot of us have this mentality.

If you wake up and see your account is positive, take a minute to sit quietly and think rationally.

You need to focus on the fundamental thing that your position is now telling you.

You have called the market and you are RIGHT.

We know by its very nature that the market goes up and down and as a result we worry that we may give a portion, or worse, ALL of our profits back.

I quote from memory of someone elses work (I forget whose) when I say that we are "taught" from an early age that:

a) if we lose something it will eventually come back (e.g. you lose your car keys, don't worry, they WILL turn up)

b) if you see something, take it or you might lose the chance (e.g. if you see money lying in the street, pick it up quickly because it may not be there for long)

This translates into trading...if our position goes against us, we tell ourselves not to worry because nothing goes one way for ever and it must surely come back.

If we are winning, we want to get out quickly because if we come back later, all our profit may all be gone.

It is hard to overcome this because it has been "programmed" into us.

To be a good trader (particularly on daily setups) in my opinion, requires going against what we have had ingrained from an early age. To put it simply, it requires going against human nature - what our heads and our hearts tell us.

It's so cliched it's boring. And yet all traders that don't make it into the elite 5% suffer a manifestation of the same problem. They are either not cutting losses early or not letting their profits run.

I, like you, wondered how it was possible that the market always reversed after I got out. Late last year I went long the GBP at around 190.00 targeting a move to $2. Let's just say I was early but I was convinced it would happen. Well, the market began to fall. And I held and I held. When it got down to around 1.85 and the pain was so high from losing 500+ pips that I could hardly sleep, I bailed out. And what happened? The market turned at almost exactly that point and only a few weeks later it was trading at 1.98 - a full 800 pips up on my entry.

Now whether I am right or wrong I will tell you how I see this in my head. I see it as the market having to turn because all the amateurs like me have held their position for so long, past so many logical places to get out that finally the pain is FORCING them to bail out. And once the weak having been shaken from the tree, the market is ready to move up again. As I said, this may be wrong, but this is how I like to view it.

So how do you overcome this?

Pick a point before you place a trade that, if the market hits, proves you are WRONG in your analysis. If you see, for example, a double top, and want to go short, place your stop a little way above the double top.

I have done this before, shorted at what I consider a top, only to see the market move up through it. Rather than close, I would then move my stop further and further away with the reasoning, this climb cannot go on, its got to fall...it's just a market fake out...it will come down.

But here is the point: Who cares if it comes down an hour later? Or the next day? Your reasoning is that the double top is the turning point. If the market trades through it, you are WRONG. This is NOT the top.

What if it was only a fake out and the market then plumments? You likely end up frustrated.

What if it wasn't and you move your stop further back, can't face taking the larger loss and move it still further back again? You could end up with nothing.

And I know what I think is worse.

Remember, the market has a way of frustrating every trader but the greatest traders are flexible. If you are wrong in the short term, get out, get on the sidelines where your head is clear and wait for the market to move in the direction you thought it would.

Timing is everything when you are trying to make a living do this. If your timing is wrong, then get out. Sometimes the market may give you another chance but you can bet the time you need it to most, is the time you will get dragged out.

This may make you laugh but it took me, personally, just over two years to realise this simple truth: You have no control over the market. You cannot influence where it goes. The market doesn't know who you are, it doesn't care who you are or what you could lose. It goes where it goes and you either ride it or you get run down.

So, ok, that's how you should cut losses. How about letting profits run?

Well, all I can tell you is my own experiences and ways of trying to do this.

For me, a key thing to remember is NOT to look for reasons to exit a trade once it is going well.

I did this a few months back with the GBP/JPY. The trend overall was firmly up but it had suffered a rather sharp pullback over a few days. Then it had bounced at an ema that I use and began making its way back up.

So I got in based on this DAILY bar and near the end of the day it was up just over 100 points. I started thinking 100 points is a lot, the amount I am up is now considerable and I started seeing reasons to exit. Suffice to say, I found a good one - the stochastic was overbought on the HOURLY - it was running along steadily just above the overbought line....so, out I came...

In the asian session, the price steadied and while it did this the stochastic came slowly down to oversold and then began to turn up...but the price just hadn't had the pullback.

To cut a long story short - a few days later the market was up 1,000 ticks on my initial entry. For me, the emotional pain I felt at being in it, then exiting and missing the massive move, was the same as, if not worse to just having LOST in the first place.

So at the time I saved the chart of this because it hurt me so much to have exited early.

I spent five months trading from home and gradually lost all my money. Looking back, that one trade could have been the difference between me being still at home trading for a living and where I am now - which is back in the daily 9-5 in an office doing a job I hate.

So - of utmost importance - remember why you entered the trade in the first place.

Sometimes you learn something when you least expect it. I actually had an epiphany of sorts when my girlfriend who knows absolutely nothing about the markets at all said to me: "everyone has different reasons for doing things - they all play the game a different way" - This is the reason why the market goes up and down. Everyone is buying and selling based on different thought processes. Different strategies. Different methodologies. But your reason is based on YOUR methodology so forget the other players. Let the market guide you.

In my opinion - a 20 tick pullback in a 100 tick move up is not a sign that the move is reversing. It is natural and it is inevitable. Consider the other market particpants. In the short term they may want to scalp a small move or they may be hedging and therefore taking a position for another reason UNRELATED to profiting. They may even simply be amatuers with their inevitable way of thinking - "this can't go any higher." They will cause temporary fluctuations in price but actually exiting a good trade should be done when YOUR reason for entering is WRONG not just because it is suffering a temporary setback.

I personally use price action. So, if I enter on the break of a pin bar, (with a stop loss lets say, of 100) I EXIT either when:

a) The daily bar gives me a sign the move is over and that signal is then CONFIRMED e.g. Signal is pin, confirmation is break

b) My stop is hit.

If I get in a trade and the market is up 300 ticks on the first day, I still have my stop loss where I could lose 100 if I get hit. For me, being UP is not a consideration for getting OUT.

Some people take these signals and close on the FIRST DAY because they have made a killing. Just think for a second...You are trading off a daily bar. You've had just ONE go in your favour. Try this. Look at a massive trend that you would like to have caught. Now count how many daily bars made it up, from bottom to top or vice versa for shorts. Now consider exiting on the first one that goes your way.

Of course some people don't like to play this way. They like to take profits or they like to scale out as it moves their way but I am talking about being a trend trader and playing daily bars to capture the move or at least a large part of it.

Most importantly is stick to looking at your timeframe. Many of us make the mistake of entering on a daily and then watching the trade on an hourly. Think logically - an overbought stochastic on the hourly is not a sign to exit a long on the daily.

I would add finally, that it is always an eye opener when you read about how other traders have managed positions. If you research some of the best and highest earning traders in the world and follow what they did on the charts you will find as I did that if you took the same position, the moment you would look to exit is usually the moment that they are looking to ADD to their position.

Look at the traders that made a killing in the incredible fall that happened in Natural Gas futures. Go and look at a chart of that market. On a daily you wonder how anyone that saw it didn't get rich. It's straight down. But then imagine being actually in it and seeing a sharp two day spike up from all the bargain hunters...most of us, if honest would be long gone, patting ourselves on the back with our profit even as the market turns and falls through the floor.

So to sum up: Have the strength of your convictions.

There are some traders that aim to take 10 pips a day - fine. If that is your style then by all means do that. But if you want to trade off daily charts and make a living and if you consider that a stop on a daily chart may be 100 ticks or more, don't be rushing for the exit when you make 50 or even 100.

This is not to say that any trader should hold blindy. But try and be logical. Look at price action and let it tell you where the market is going over the time frame. And remember the other participants in the market.

When oil went from around $75 down to around $55, of course you are going to get people coming in at $65, then around $60 - this is natural...but this doesn't necessarily mean there will be a reversal - there is always a tug of war in the market...but someone is going to win...and if you are patient, that someone may be you.

Tom

I would have liked to have posted that reply Wiz, but to answer TradeStar's post in my own way, and back up your points, I've added an image of some of my current trades.
TradeStar, check out the entry dates, go back and look at the ups & downs since entry, and see how, as you develop your methodology, and experience, you won't jump out of trades at every reversal. It does take 'courage' at times, but if you thought you were in a good trade at the start, and your stops are based on MM logic, then hang in there.
One of the other pro traders (can't remember who) uses a method whereby if he gets stopped out, he immediately enters an order at that point. The idea being that if the thought processes behind the original trade were correct, and he's been taken out by market noise, as the original trend resumes he'll be back in at the point of the stop loss.

I would also like to say that whether or not you want to, or agree with, system trading, if you try it you will have an INVALUABLE learning experience.

I personally like to use discretion when trading price action setups but I had a stint of several months trading a trend following system rigidly. Ultimately it didn't work out as well as I had hoped but it taught me two essential traits - patience and discipline.

Patience to wait for the signals and not trade until I saw one and discipline in exiting ONLY when the system told me too.

I managed to capture some very good moves that I am sure I would have exited early otherwise.

So, if you want a good grounding then try a system.

Wiz,

Very well said.

Hi
I trade for 1 year now and I agree with your idea,but when you trading with trend in daily chart you had been an enormous stop loss I think 4H chart is good too.
thanks for idea and i'm sorry for bad english

Hi Stone,
You are right, using the 4hr helps to lower your stop and price action often shows up there first...
Tom

Very true. And while i would never hint that a particular lifestyle that i might find satisfying and enjoyable could be so for another, i can state for myself i see many wonderful possibilities that take little income to sustain.

For instance, my wife and i are very close to moving back into a recreational vehicle full time now that our nest is nearly empty. Along with this change will also come more opportunity to get out and enjoy our love of prospecting and rockhounding. I know of several couples that prospect for gold and make a living on just that alone. Sure, it's not the "I've got a 4 million dollar mansion, 8 car garage lifestyle"...but they are living their dream in a simple-easy-to-sustain, enjoyable, and healthy lifestyle together in nature's beauty.

. . . this is the reason i'm making the shift away from the shorter (60m and under) charts and now focusing my energies on the 4hr charts and above. After two years of trading nearly 6 to 8 hours a day i reaslized this style of trading was not going to allow me time with my wife and our mutual goals.

Food for thought.
: ) Thom