Trading Strategies

Become a professional trader by following easy and effective strategies

Daily Chart Trading Strategy

Feb 23, 2021 06:30


The daily chart trading strategy is a simple trading strategy that even beginner traders will find so easy to use. It works better for daily chart. If you think that trading the daily chart fits you than intraday trading, then give a try to this trading strategy.

Timeframes : Daily

Instrument : You can use it for any instrument

Indicators : Stochastic indicator required with default setting (5,3,3)

Fibonacci tool: Retracement tool

Reasons for daily chart trading system having advantages than trading in much smaller timeframes:

  • Traders are less frequent which means you will not over trade
  • Market noise is less involved in the daily timeframe compared to the 4 hr, 1hr or the 30 min and much lower timeframes.
  • The trading signals tend to be more reliable.
  • It has much bigger profit potential.


To be noted is that the stop loss would tend to have a large distance as it is based off the daily chart.

Then it means the risk is higher?

Risk should be set with consideration of the percentage of trading capital. We have many variations of lot sizes we can trade so while the protective stop in pips may be large, it can still be a small percentage of risk capital.

Working of this strategy :

We all know that a market will trend and then will consolidate. It will happen again and again. An uptrend will eventually turn into a downtrend and the opposite is also true.

We will get corrective moves in between a full blown trend change and that is what this simple daily chart trading strategy wants to capitalize on. We need to see price meet up with one of our Fibonacci level and confirm with our stochastic oscillator.

Let us explain with a chart below:

Trading Rules:

The rules are very simple to follow. Just look at the trading instructions listed below and do the same.

  • The pair must be in an ongoing downtrend and we have made use of an objective trend measure a – break of a trend line.
  • After seeing a price takes out a previous high which is the beginning of the stage for an uptrend.
  • After a high is in place, we can then draw our Fibonacci retracement levels.
  • Then after price pulls back to the 61.8% retracement level and puts in a price action reversal candlestick.
  • Stochastic was in an oversold zone so this is a valid trade and we can place a buy stop trading order at the high of the reversal.
  • Set take profit at a main swing high in the opposing market trend.


Pros :

  • This strategy has the potential to give you over 100 pips a day as it is a larger time frame trading system.
  • No need to worry on the random fluctuations in price or news releases that will affect day traders.
  • Easy to understand and follow.


Cons :

  • This cannot be followed in non trending market.
  • This will not appeal to traders who want constant trading action.
  • Stop loss might be high in a range of 50 – 100 pips.

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