If you can’t handle the pressure of 5-min charts, but think your too impatient for the daily timeframe, then it’s time to consider trading 8-hour charts.
They're not the norm I admit.
Many trading platforms don't even have them, going straight from 4-hour up to daily. That's a real shame, because in my humble opinion 8-hour charts offer great benefits to the newer trader.
Choosing the right timeframe
This an essential part of developing any system.
Timeframes are important because they must be made to fit your schedule.
They must help keep your psychology in check.
But most importantly, they must help you to make money.
Scalping and other short intraday timeframes are what newbies gravitate towards. And there are psychological reasons for this.
The idea of earning a daily wage is one reason.
A strong one. After all, the more trades made, the more money you make, right?
Then there is your spouse or partner to think of. If your seen sat at your screen all day, hopefully they think your ‘working’ hard at your new venture.
Even your own sense of guilt is appeased – from early on in your life your told that sitting around doing nothing is bad – so now, as an adult, you try do as much as possible - that's what successful people do.
Finally, when you close a trade the same day, the fear of an overnight move against you disappears.
Despite all the above though, intraday trading is the worst possible place for a beginner to begin.
The real difference between intraday and end of day
Personally I think price action and technical analysis are more accurate the longer the timeframe used.
This is disputed by a few of my day trader chums.
But one thing they can’t dispute is that keeping your cool intraday is so much harder than when you get to sleep on it.
All your reactions to the market are heightened intraday.
After a loss, you can slip into fight or flight mode very easily.
Instead of blood pumping to your rational brain, it goes straight to your irrational lizard brain.
You literally go out of your mind, leading to batshit crazy things like holding losers and taking trades you shouldn't.
It’s much better making a trading decisions from your rational executive brain, after a good night's sleep.
The problem with daily charts
Oh yes, they do exist.
First off - a lack of signals.
I’ve waited weeks for trades. And when they did arrive it they could be pure stinkers. This in itself is enough for you to lose your discipline.
One way to avoid a lack of trades is to follow as many markets as possible. And correct, there will be no shortage of trades.
But are they going to be quality ones?
Markets are highly correlated; many times you’re just getting one giant trading signal happening across all markets the same day. Not always. But often enough.
When you trade off the daily charts, accept there are going to be lean times. If you lack patience – as I did for a long time – then your likely to struggle.
Step up the 8-hourly
With this timeframe your technically day trading.
Well to a point anyway.
You enter your positions intraday, you move your trailing stop intraday (using my stop loss method). But you won't always be closing the trade intraday - unless its a loser of course.
If you only trade a handful of markets – as I do - with 8-hour charts you will get your fair share of trades.
They also work well with price action. Maybe even better than daily charts.
And while its still intraday, there's enough time lapsed between candlesticks or sessions, that you're not so likely to go full tilt.
In short, trading 8-hour charts allows you to lead a normal day - go to work, walk the dog, see a movie, and you still get to trade the market up to three times a day.
To be honest 8-hour charts have proved a god send for my own trading.
I'm a lousy trader on most intraday timeframes. But like any addiction (oh yes trading can become an addiction), I'd find myself sneaking back to them when markets went quiet on the daily charts.
Anytime you find yourself doing this there's a good chance your slowly losing focus.
Trading 8-hour charts gives me that 'intraday' outlet that I (and so many others) crave, without turning to the lower timeframes.
My bread and butter still comes from daily charts, but 8-hour charting has provided that extra boost to my trading results.