If you do not know how to recognize whether an currency pair is trending, in a countertrend mode, or a consolidation mode then you will get confused when you look at the lower time frames. Using multiple time frames is an advance optimization technique. Once you trade the daily time frame for a while, you will learn when price is trending, going against the trend, or in a consolidation pattern.
I think we can all agree that global economics has a role to play with forex prices. As the trading day is made up of several sessions at different times around the world, each session with its own set of economic data to consider. It take the whole day for price and for traders to react. So the daily candle or the close of the daily candle is the only real measure of a currency pairs price and range of price. Seeking value in the markets requires the results of all trading sessions around the world. What is fair price in one timezone might not be fair price in another several thousand miles away.
So the daily candle gives us a clearer picture of the results of all traders opinions, all economic data taken into consideration.
This is why the daily support and resistance levels, candlestick patterns and moving averages have such consistent effects. When you start to trade you need consistency and logic. By learning how to trade the daily charts your not only gaining a profitable source of incoming for your portfolio, but your also pathing the way to give bias to your trading in lower timeframes.
So if your failing as a trader, stop and think. You need to learn how to start the car before you can learn how to drive it. You need to understand the direction of power in the markets, what the market is doing and why it is doing it, before you can trade it and then trade the smaller components of those directions.
This article is not intended to recommend a system to trade the daily timescale. What is clear is that the daily timeframe is where systems are designed. Therefor you should get better success trading any robust system. Wether it be a moving average cross over, a stochastic trend system, the cloud, pinbars, MACD divergence and the plethora of other tried and tested systems. Each symbol (currency pair), each state of the market lends itself to one style of trading. It is your job as a trader to find a set of systems which match your personality and style of trading, your limitations in trading and your expectations in trading. You can then build the foundation on the daily chart to your trading life.
The tools I use for trading the daily charts are not the tools which I use to trade intraday. Thats my style of trading. I look for pinbars and fakey setups on the daily charts. I look for them at areas of clear support and resistance. I then trade them in the direction of the next level of support and resistance. Intra day I would trade the daily levels of support and resistance on the 4 hour charts and the daily pivots, fibs of the previous days range etc. in the direction of the daily bias. If I do not have a daily trend, Im not trading the currency pair. For instance when the USD/JPY is not trending (like this week) Im not trading it on the hourly charts and 15 minute charts as I have no directional bias. I instead look to Cable which has a clearer indication that it is pulling back, counter trend retracement. Im not looking on the hourly for the change of daily trend. Im looking to trend trade the hourly in the opposite direction to the weekly and daily trend (which is short). So Im longing cable and leaving the unpredictable JPY to begin to tell me its ready to keep going on its trend to weakness.
Im not suggesting that you can't be successful as an intraday trader if you can't or don't trade the daily charts. The daily charts have greater stop distances and this might place live trading outside your ability as a trader. Perhaps just by analyzing the weekly > daily > 4 hourly in your trade planning is enough to give you the knowledge and confidence as an intraday trader. I certainly thought so when I started trading and many of the trading courses believed the same.
But as my experience grew I realized that most of the experienced traders I talked to, just never traded intraday. It was not until I backtested daily trading over 120 years worth of daily candles (12 pairs x 10 years) that I too had the confidence to trade live the distances of these stops. Also it was not until I began testing and trading daily charts that I could bring consistant profits into my trading life. I was always making and losing the same amount of pips with intraday techniques. Now I have a regular income which I can use to fund my research into intraday systems and fund my intraday trading.
In the 3 years that I have been trading Forex, so many things have changed. Each day technology advances. The concepts, systems and signals become more complicated and more expensive to implement. Data from brokers becomes more convoluted. Stops become more venerable and profit target market orders more frequently are not triggered due to broker spread alterations. Given that the world of Forex is changing so quickly, having just one thing to rely on, for me is becoming so much more valuable.
Happy trading and happy sharing.