How to Know Which Direction to Trade Today

Daily bias means deciding if the market is more likely to go up or down today. Without a bias, you end up taking random trades and losing money. Think of bias as your compass before you start walking. Entry setups are easy to find. The hard part is knowing which ones to take. A clear bias tells you which setups to act on and which ones to ignore. Most traders fail because they jump straight to trade setups without first checking the big-picture direction.

Premium and discount zones tell you where price is expensive or cheap. Here is how to find them. First, identify your swing high and swing low on the daily chart. A swing high is a candle with a lower high on both sides. A swing low is a candle with a higher low on both sides. Next, draw a Fibonacci retracement from the swing high to the swing low. Anything above the 50% level is premium. Anything below the 50% level is discount. If price is in a premium zone, the market is expensive and more likely to go down. If price is in a discount zone, the market is cheap and more likely to go up. You can also apply this same idea to a single daily candle. Use the previous day's high as the top and the previous day's low as the bottom. That gives you a smaller dealing range to work with each day.

Power of Three describes how a daily candle moves in three phases. The three phases are accumulation, manipulation, and distribution. On a bearish day the candle opens, pushes up briefly to trap buyers, then falls and closes near the low. On a bullish day the candle opens, pushes down briefly to trap sellers, then rises and closes near the high. This matters because it tells you what price should do before it moves in your direction. If you are bullish, you expect price to dip below the midnight open first. That dip is the manipulation phase. It shakes out weak traders and gives you a better entry price. Use midnight as your starting point for the daily open. Watch whether price trades above or below that open early in the session.

Having a bias is not enough on its own. You also need timing to line up. Here are some common timing mistakes. Taking a trade right before a major news event like CPI. The news can spike price in any direction and stop you out. Trying to go long when price is already trading at a previous day's high during the morning session. The move has already happened and there is nothing left for you. Shorting into a market that is already near a strong support level late in the day. Always check the economic calendar before trading. Know when big news events are scheduled. If news is due soon, wait until after the release before entering. Also pay attention to which session you are in. If the market already moved hard during the London session, the New York session trade may not set up for you that day. In that case, sit out and come back tomorrow.

Here is the full process in order. First, look at the daily chart and find your swing high and swing low. Draw the Fibonacci retracement and note if price is in premium or discount. That sets your high time frame bias. Second, check the Power of Three. If you are bullish, expect a dip below the midnight open. If you are bearish, expect a push above the midnight open. Third, check the economic calendar. Know if any news events could disrupt your plan. Fourth, sit down at your trading session and confirm that price behaved the way you expected. If everything lines up, look for your entry setup. If the market already ran to your target or the timing does not make sense, do not force a trade. Wait for the next day. Skipping bad days is just as important as taking good trades.