How to Make Money By Trading Just Once A Week
I often get comments from people who are skeptical that you can build your account by looking at charts just once a week.
So I’m writing this short post to show you how it’s not only possible, but one of the best ways available for you to achieve significant success as a trader.
Let me go even farther: if you can’t trade on a weekly chart in a totally objective and dispassionate manner …
… then you’re definitely not going to be able to do it at a shorter time frame either. You’re going to get killed in the market. You’ll wipe outyour account sooner or later.
So I hope that gets the point across about just how important this is.
The secret begins with long-term charts, much longer than most traders consider for their trading. Taking a long term view is what allows you to follow many trading markets at a time (currencies, stocks, futures) without being overwhelmed. It gives you the time and space to find the very best opportunities and pounce on them as they arise.
This does take a whole different mentality than what you may have right now. That’s because a lot of traders are very short-term. They pull up a chair, pick three hours of the trading day, and find what look like small moves in a handful of individual markets.
That’s time consuming, stressful and usually not very profitable.
It’s also exactly the opposite of what I do. I look for the big moves in the markets and I look to take a piece of the middle out of those moves.
I'm not looking to steal 10 pips here and 40 pips here … then have a heart attack if it doesn't hit my take profit in the next 5 minutes because the trade’s going to escape from me.
Instead I love finding a position and feeling comfortable that I'm going to be in that position for two or three weeks -- or even two or three months.
So I'm looking for 150, 300, 500 pip moves. Sometimes even 1,000 pips when things go really well.
That simply won’t happen when you trade on a 15-minute timeframe.
And here’s the real danger: trying to squeeze those 10, 20, 30 pip moves out of a day trade tends to make you very emotional. And when you get emotional, you lose. Sometimes big time. You self-destruct.
But taking your time to look for big trades?
That’s a whole different ball game.
Getting into the ‘big trade’ mentality means building a toolbox to make those trades happen. And not so coincidentally, that same toolbox tends to wring out your self-destructive tendencies to over-trade.
The first step is to slow everything down.
Let the markets come to you. Instead of reacting to a 5 minute or 1hour chart or whatever, you slow everything down, become objective and see the big picture.
Slowing everything down allows you to dispassionately evaluate the market, get into good trades, get out (sometimes at a profit, sometimes at a loss), and look at the next setup in a completely rational, objective way.
The path toward the bullseye of a great trading opportunity starts by first identifying if something's in a trend. So if you open up a chart, it’s going to be going up, it's going to be going down or it's going to be going sideways.
I like trading every market condition except a sideways market condition, because I'm looking to trade big moves in the market.
Not every chart will have what I’m looking for, of course. But looking at weekly charts means I have the time to look at lots of markets until I see something that meets my criteria.
Once I see a promising trend, I draw a structure or a boundary around prices. Is there a double top or bottom? A head and shoulders or its inverted cousin? Is there a channel? A triangle of any kind?
Until you can see the structure, it’s very difficult to see where the market might be more likely to go next. Is that trend going to continue? Is it going to turn around? What’s the evidence?
Tradeable moves always start with a pattern you’ve identified.
That means there’s sometimes no discernable pattern at all. That’s fine too – now you know there’s no need to worry about that particular market this week. You’ve just saved yourself some time and money by not trading it.
But let’s say you do spot a pattern or structure. Now you defer to the market. Just because you found something doesn’t mean the market’s going to agree with you.
That’s been part of my growth as a trader, by the way. I used to jump too quickly when I spotted (say) a double top or head and shoulders. I used to fail to watch for price action to confirm that pattern.
So take it from my well-earned experience: you need to wait for price action that tells you a big move is imminent by confirming that pattern you’ve spotted.
Let the market tell you there’s a high probability of a favorable move in the next weekly bar.
That means waiting for a key reversal or an inside bar. Or a series of inside bars (a coil).
Now everything’s lined up in your favor. You can put in a pending order(also known as a resting order) so that if and when the price follows through, you’re in the market.
I do that with a buy stop or sell stop, depending on whether I’m going long or short.
Adding everything together like this gives you the very best chance of getting into big trades. Yes, you’ll have some losers when it doesn’t work out.But your profits will be big ones because you’re aiming for the big trades.
All this is possible just by working with weekly charts.
And by now you may be thinking you could do this just as well on daily charts, or 4 hour charts or whatever.
Of course you can.
But remember that it all starts at the weekly level. If you can’t objectively do what I’ve just outlined here (trend, pattern, price action, pending order) on a weekly chart…
... then daily charts (or anything shorter) are a bridge too far for you right now.
I’ll be even more blunt: if you can’t follow this process on a weekly chart, what on earth makes you think you can do it on a daily chart or a 1 hour chart or anything like that?
You need to walk before you can run.
But unfortunately, most traders vastly overestimate their capabilities.They try sprinting before they’ve demonstrated they can even walk the straight and narrow line of objective trade analysis and execution.
And that’s how you make money by trading just once a week.
Use weekly charts and prove to yourself beyond any doubt that you can trade competently and professionally at that level.
It might seem like you’re holding yourself back with a weekly chart, but you’re really not. You’re learning the most valuable skill of all (trading without emotion) by slowing everything down to the point where your emotions are no longer a factor.
Try it. Show some discipline by using weekly charts.
If you can get things right at that level, then it’s okay to move down to daily charts. Daily charts definitely give you more opportunities to make money.
But until you do proper training at the weekly level, you’re not ready.You’ll only lose money faster, erode your confidence quickly, and destroy your chances of being a successful trader.
You have to see the forest for the trees before you can make big trades and the big money that goes with them.
Did that help you understand why learning to trade profitably on weekly charts is not only possible, but also necessary for your long-term success as a trader?
Let me know with any questions or comments in an email.
P.S. If you’re wondering about the science behind these longer-term trades, there are plenty of studies backing me up on this.
Gutierrez and Kelley (2008) discovered that price tends to keep moving for up to one year, after even a small reversal.
In a study by Friesen et al. (2009), they said: “First, return autocorrelations are negative over very short horizons, positive over intermediate horizons, and become negative again over long horizons.”
Therefore, using daily, weekly, and monthly timeframes gives you a much better chance.
Gutierrez and Kelley (2008) also discovered the following phenomenon:
“Our findings extend to weekly price movements with and without public news. In addition, there is no relation between news uncertainty and the momentum in1-week returns.”
In other words…
When it comes to momentum (how much price moves), the uncertainty that news brings about doesn’t affect the price direction on longer timeframes.
Therefore, there’s no need to factor in the news. It’s distracting and will stress you out, which is the downfall of most news traders. Again, studies dating back decades agree with this statement(Oberlechner et al, 2005).
Friesen, Geoffrey C.; Weller, Paul; andDunham, Lee, "Price Trends and Patterns in Technical Analysis: A The oreticaland Empirical Examination" (2009). Finance Department FacultyPublications. 11
Gutierrez and Kelley, 2008 — R. Gutierrez Jr.and E. Kelley, The long-lasting momentum in weekly returns, Journal of Finance63 (2008)