When drawing trendlines and are the trendlines drawn on the 1 Hour Chart or Daily chart?
Hi Michael, for me personally I draw trend lines on the daily in red, then on the same chart when I change it down to H1 timeframe I put those trend lines in blue.
I can see on the article posted 27/11 for NZD/USD trade in myfx trading hub, if you look at the profit target 0.6567, on my chart that is the daily resistance line I've put in from my daily chart. I've just noticed on my MT4 my hourly chart doesn't go back as far as July like Brad's does in that post.
Would love to hear more from others about this, do you keep your H1 chart trendlines exclusive to that timeframe? Cheers Heather
Hi Michael, you should be drawing trendlines on both the Hourly and Daily Trendlines. The bigger trends will be spotted on the Daily charts whilst the close to market 'actionable levels' are more often found on the Hourly charts.
Heather - you're doing it right. Use a color code for Hourly trendlines and a different color for Daily trendlines if they are on the same chart. You do that otherwise you will get confused with what trendlines are what. Breaking a Daily trendline is more important to us then the currency breaking an Hourly trendline because that may mean the change of the overall trend.
Well it seems as though I have been doing it right because I do draw trendlines on the Daily and Hourly charts and I use different colors for both. My next question is, are the trades based off of the daily charts? I've been finding it very difficult to get a 3:1 Risk-to-Reward ratio from an hourly chart.
I'm wondering that too, are we looking for set ups only on the hourly (using the daily trend lines) or also on the daily or is that just a personal thing of what we as traders want to do? Brad - what do you do?
another question I have is if we can't find a risk to reward of 3:1, does that mean you don't take the trade? or can you take the trade with a smaller profit target, smaller position and tighter risk management in place?
or is that just personal preference of the individual trader? I guess some traders won't even think about taking opportunities that aren't A grade.
I look for setups on all the charts. You'll find when the currencies move you'll have no trendlines on your Hourly chart, so you'll need the trendlines drawn on the Daily also.
Don't forget the Daily trendlines are more important because that's when the trend could be changing so it's very important you have trendlines drawn across all timeframes.
I do execute off the hourly charts but that doesn't mean I'm not looking at daily trendlines as well.
With regards to your second question - there isn't a lot of 3:1 trades around at the moment so adjusting your trade plan accordingly is a very good idea. Your spot on smaller trade size, smaller loss, and smaller profit target. Still, try and make sure you have direction on your side and you can still do smaller trades and add cash to your account whilst we're waiting for the markets to kick back into normal again.
Professional traders will wait for the opportunities most of the time. But still, if there's cash on offer you may as well take it and keep building the account via smaller trades then normal!