Using your Forex System on a Weekly Chart

Posted by admin 11/09/2013 Comments are off 1130 views

Using your Forex System on a Weekly Chart

Have you considered using your forex system on a weekly chart?

Trading the weekly charts is one of the best ways to trade the forex market.  With most forex systems, traders are normally encouraged to trade the 5 and 15 minutes charts. Nothing is wrong with this, as the trader can still make money – as long as he is trading in the right manner and sticking to the rules. The problem lies in the ability to be on hand to enter the trades as they occur. We are all busy people.

Why Should you Use your Forex System on a Weekly Chart?

Trading your system on the weekly charts will provide you with an easier way of monitoring the markets, and making money as well.  However, you will have to develop a sound risk management policy and, equally, have a fair amount of patience.  If you are trading the 5 minutes charts, you are basically looking at a maximum of 200 pips range.  On a weekly chart, however, the pip range is in thousands. Contrary to popular belief, it is still possible to trade the weekly charts if you do not have a million dollars in your account. All you need to do is to trade in smaller sizes. This means that if your usual position size is a standard lot size and you risk 100 pips on each trade, you can scale it down to mini lots so that 1000 pip stop loss will only amount to the same $1000, as it would on a standard account.

Just as the stop loss could be 1000 pips, your take profit can also be 1000 pips or more. With intraday trading, you have to put in a lot of screen time to make 1000 pips a month, but trading the weekly charts, you can make that same volume of pips by simply looking at the charts once a day.

What you Must Keep in Mind when Using your Forex System on a Weekly Chart

  • Your system must have a decent filter

This is very important because you do not want a scenario where you will be stuck in several trades in a ranging market. The stop loss on the weekly charts could be heavy; so, if you enter trades without adequate research, you will end up with a drawdown that you may not be able to recover from in the next month. So, if your forex system doesn’t have a decent filter, work on developing one before you deploy it to your live trading account.

  • You must be patient

As has been said earlier, the patience to wait for weeks is vital if you choose to trade in this manner. You have to endure weeks of watching your money ebb and flow. Trades on the weekly charts take time to play out. Typically, a trade would last a month but, in many cases, it could run for 2-3 months.  In the same vein, you also need to have the mental ability to see your money in huge drawdowns. Of course, this shouldn’t be a problem if your trading is in line with your money management principles.

 

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