Daily and 4hr Price Action Strategies
Not everyone is able to sit at the computer for hours a day and trade. In fact, many of you have full time jobs, family lives that keep you busy, yet you still want to be able to participate and trade in the market.
A lot of times, these are the emails I get from people, whereby they have the lives above, and only have a couple hours to trade after work. You don’t want to actively manage positions throughout the day because of work and are looking for a simple way to trade.
If this resonates with you and your situation, I recommend trading rule based daily and 4hr price action strategies.
1) If a strategy is rule based, then all the rules are clearly explained to make a trade. A rule based strategy generally goes something like this;
Conditions A, B and C have to be in place to make a trade.
If you do, place your trade at X, your stop at Y, and your targets at Z.
Obviously i’m paraphrasing, but as you can see, rule based systems make everything very clear to find and trade setups.
If you are having to constantly look for discretionary elements, levels, etc., that takes more analysis and time – something of which is very limited for you.
By having rule based strategies, it simplifies the trading process for you so you can spend more time taking trade setups instead of analyzing and deciding if you actually have a trade or not.
2) Use Set and Forget Strategies
Along those lines, since you cannot sit for hours, I recommend using set and forget strategies. This means you do not have to manage them as they continue, or have stops based on indicators.
Sure, if you had hours to sit per day and could actively watch the markets, then there are some strategies I would consider managing, especially if they were designed to go for runners.
But, I also have price action strategies which are completely quantitatively based over 10 years, meaning the statistical edge has been demonstrated over the last 10 years. Thus, if you trade them as is, going for a fixed target, you can and will profit based on their edge.
3) Daily and 4hr Price Action Strategies
First off, there is nothing wrong with trading intraday time frames, using anything under 1hr charts. There are traders making money on every time frame across the board. The time frame is not so important, but more a personal and stylized preference (also availability).
However, with limited time to find setups, monitor charts, etc., I recommend the daily and 4hr charts.
Generally, the lower the time frame, the more detailed analysis you have to do and more variables you have to incorporate.
More details + more variables = more time needed to make trade decisions. And time is commodity you have less of.
Statistically, various patterns such as pin bars, inside bars, engulfing bars, etc. can and will test statistically strong for various pairs.
But plug the same method and system on a 30m time frame or less, and the accuracy diminishes tremendously. In fact, accuracy for these 1 and 2 bar systems tended to degenerate tremendously below 1hr time frames. Now it should be noted this is not the case for all systems, and our statistics indicate some systems actually perform better on the 1hr time frame vs. the daily chart, so its not a linear relationship.
Now getting back to the point, 1 and 2 bar patterns are pretty easy to spot and take little effort. But if you have to know the overall trend, then the 1hr trend, along with support and resistance levels for the day, then zoom in to your 5min time frame to read the price action and how its reacting to that level, that can take more time to analyze, find and trade.
However with the daily charts, these are much simpler as you have one main candle to analyze for the day and the overall trend can be easy to spot. With the 4hr chart, only 6 per day. So overall, much less work, yet still enough to keep you active on a daily basis.
Along those lines, there is one last key point I want to make
a) Server Time
Not all server times perform the same. Generally, there are three major server times broker platforms are set to
Another possibility is the NY daily close.
I have actually statistically tested about 11+ price action patterns across all server times, and their performance can vary incredibly. Some people state the NY Daily Close is the best.
But statistically, this time fails for many patterns and pairs. In fact, a pairs performance can vary wildly for the same price action pattern across different server times.
Crucial information? Absolutely!
Imagine you are trading an inside bar pattern on the daily time frame for a certain pair, based on the NY Daily Close. But statistically, that pattern is < 40% accurate. Would you want to know that before trading it? Hopefully so.
Some pairs did statistically better across several server times, but completely failed on another for one price action pattern. Yet on the same server time they failed on for pattern A, they profited highly on for pattern B.
Volatility and order flow for that pair in relationship to the sessions. That plus the type of pattern all played a part.
Regardless, server time is key and it is critical you understand how your price action pattern performs, whether it’s a pin bar, inside bar, engulfing bar, or whatever. Information is key here.
For those of you who have very busy lives, with a full-time job, family, and general commitments that you are unable to sit and trade for hours, there is a way for you to trade and participate in the markets, while not having to stay up all night.
For this, I recommend trading Daily and 4hr price action strategies that are rule based, easy to manage, yet allow you to be engaged in the market and able to make money.
Generally set and forget strategies will be easiest to manage, while also making sure the server time is appropriate for your strategy. If you have all those in place, then you can trade on a weekly basis, make plenty of trades to be engaged, not have to hold positions for days on end to see a result, and only need a few hours to trade per day.
I hope this helps for all of you who fit into this category and that you found this article informative and useful.
Please make sure to leave a comment below and your thoughts on it, along with clicking the like button
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