How to Create Trades You Can Wait For #2

See “Where You Are Now” on the Daily Chart

Hello. This is THE DAYTRADE.

Last time,even if the direction is aligned, you lose if the location is badwe talked about.

To assess this “location,” there is something you must do first.

On the daily chart, confirm “where you are now.”

Why look at the daily chart

The daily chart represents the biggest trend.
The daily trend forms the foundation for the 4-hour, 1-hour, and 5-minute timeframes.

If you only look at the 4-hour chart, it may appear to be a clean uptrend within that timeframe.
But when viewed on the daily chart,it was just a retracement within a daily downtrend.
This happens often.

So, I alwayslook in the order: daily → 4-hour → 1-hour → 5-minute.

Three things to confirm on the daily chart

① The daily trend is up or down

If both the highs and lows are higher, it’s up.
If both are lower, it’s down (Dow theory).

② Where is the daily horizontal level

Draw only one horizontal line.
If risingthe swing low(the low that started the up move), if fallingthe swing high(the high that started the down move).

③ Where the current price sits relative to the daily trend

• Along the daily trend, is it in a move upward?
• Against the daily trend, is it retracing (pullback)?

This #3 is “where you are now.”

What you do changes depending on “where you are”

If the price is moving in the direction of the daily trend

on lower timeframes, wait for a pullback in the same direction as the daily chart.

If it’s retracing against the daily trend

On the 4-hour chart, it may be moving opposite to the daily trend.
In that case,decide in advance whether to take the daily trend or ride the 4-hour trend.

And even when riding the 4-hour trend,
avoid near the place where the daily pullback (retrace) is about to end, i.e.near where the daily selling (buying) is likely to occur.
This is the “location” discussion I mentioned before.

You only need to look at the daily once a day

The daily chart can form only one candle per day.
There’s no need to look many times.

In the morning once,
“Is the daily trend up or down?”
“Where is the horizontal line?”
“Where am I now?”
If you confirm these three, that’s enough.

What to do today

• Open the daily chart and confirm whether the trend is up or down
• Draw only one horizontal line on the daily chart (the swing low for an up move or the swing high for a down move)
• In one word, note whether the current price is “in a move upward” or “in a retrace”

Summary

• The daily chart is the foundation of all timeframes
• On the daily, confirm the three things: trend, horizontal line, and where you are now
• If retracing, decide in advance whether to take the daily or ride the 4-hour
• Avoid near the place where daily selling (buying) is likely to occur

Next time, #3 “Find the daily pullbacks and swing highs/lows on the 4-hour chart.”

Pursue correctness more than win rate.
Correctness starts with the daily chart.

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Note: Results vary by individual, and profits or the duration to learn are not guaranteed.
Note: Trading involves the risk of losses. Results vary by individual, and profits are not guaranteed.