Day Trading With Multiple Charts

Day trading stocks, commodities or the forex market is very enticing because it offers a interesting way of life if you can master it, but that`s a big if.

It allows one to come in and try their luck with very little money or tools, no other business offers that.

Perhaps I should have said to try their skill as well, very few have the skills to make it trading because it does require some knowledge of how the game works and yes it is a game and all games have rules.

Many come at first to day trade and think its a lot of fun and of course challenging, they think if I could master this, how fun it would be to make a living right in front of your PC with no boss.

Oh how many have tried for awhile just to give up after losing their nest egg and have to walk away defeated with their tail between their legs and hating the stock market all together now.

Well for those types I want to write this articles and tell them a thing or two about day trading.

#1) In long term trading or swing trading the first thing we do is look at a longer term chart for real trend direction then go to the shorter term charts for entry and exit points keeping in mind the longer term direction.

So in day trading would it not be the same wise thing to do but on a shorter time frame, a shorter time chart, lets say we start on a 4-hour chart as our long term chart and then funnel down to a hour chart and all the way down to a minute chart, keeping in mind all the time the 4-hour chart direction because that`s the longer term trend and that`s what we want for a larger gain then just a few pennies.

There are those that scalp the market for a few pennies here and a few there but I`m not talking about scalping here, that is a different approach and takes different rules. I`m talking about day trading properly with some rules to follow here.

So I said that we use the 4 hour chart for the trend and use it like the long term chart on a swing trade except that this is a day trade only, then we funnel down and look at an hour chart where we might see a different trend, maybe a rally where as the 4 hour chart shows a down trend but this is a good sign for that we know as soon as this rally tops out the longer term trend will continue.

You could use a 4 hour chart then a 1 hour chart and last a 30 minute chart for entry and exit and this would be one style of day trading.

Another style is starting off with a 1 hour chart as the long term chart for direction then funneling down to the 15 minute chart then finally to the 1 or 5 minute chart for entry or exit, this style is for faster type of trades and depending on your nerves, emotions and personality will depend on what style you feel comfortable with.

You do need to find out what style best fits you but remember to use a multiple of charts to accomplish your day trading style so that you can keep in mind the direction of the longer term chart for higher accuracy trading and not just be short sighted but have the big picture in mind.

Have you ever seen multiple charts in action? this allows you to not go against the trend.