Podcast:

Why the Daily Trend is so Important

In this weekly video:

00:34 – Currencies are moving all the time

01:00 – I look at the Daily charts at the close of the candle

01:42 – Analysing the charts

02:30 – Adding probability to your trade

03:20 – Free daily analysis published each day

03:39 – Client makes +18% account gain on a live account in 9 weeks

04:24 – I’m heading to America this weekend – come and join me live in the US

Why is the daily trend so important to your trading success? Let's talk about that and more right now.

Hi, traders. Andrew Mitchem here, The Forex Trading Coach. This is video and podcast number 226 and I'd like to talk about and stress the importance of understanding the daily trend and the likely daily direction, and how that can make such a big difference to your overall trading success.

Currencies are moving all the time

Currency pairs are moving all the time, different currencies are moving all the time. Some are strong, some are weak, some are going sideways. We really need to know how do we use that information to our advantage because things are changing. News events come out, price hits certain levels, political events, whatever it might be, things are always changing. It's very hard to know what the trend is right now unless you make some form of analysis.

I look at the Daily charts at the close of the candle

What I do is each day, I'm looking at the daily charts on the close of the candle. Upon the completion of the close, the 5 PM Eastern Standard Time, that's New York close of day chart, on the daily chart, I go through the different daily charts. I'm looking for stronger currencies and weaker currencies and then, putting the two of them together. You have a very strong currency that's strong against all others or most others, very weak currency that's weak against all others at that time.

Putting the two together and looking for ideal currencies that are likely to be moving up or currencies moving down, but it's not just a case of looking for strength and weakness only.

Analysing the charts

You then need to analyse what part of the chart that price occurs in. You're looking at candle patterns, you're looking at the formations or the candles, other factors influencing that actual candle pattern right now. At what part of the chart is it appearing in? You're putting all those things together and then, what I'm doing is I'm making an analysis of where I see which currencies for that particular day are favouring buy trades and which are favouring sell trades.

Now it does not mean to say that by the end of the day if I'm looking for buy trade, it does not mean to say that that currency will end up closing higher than it opened. If it does, fantastic, but it doesn't mean to say that will happen. What it means is when I then scale down and look for trades within the day.

Adding probability to your trade

If I see trades within that day that are setting up in the same direction as my longer term trend and longer term direction, surely that adds more weight and more probability to the likely outcome of that trade being a successful trade and in my favour.

What it does also is it helps to eliminate what I call false set-ups, set-ups that technically can look quite good, but they're against that bigger picture, against that bigger trend. Now, of course, some of those will work, but the probability is less so if it's trading against the longer term picture or the bigger likely direction for that pair for that day.

I like to use trends and trade with the trend, not always just for the trend. Sometimes after, I retrace and then I pull back and then looking for the trend to move down or up, whichever it's doing after we've had some form of retracement. It's a really important point there.