Instead of having a random y-axis on your day trading chart, consider manually scaling your y-axis each day. Increase it only if the price action of the day requires it. Don’t trade until you have scaled your y-axis appropriately. Here’s how and why.

How to Set Your Y-axis Before Day Trading

Here is how I set my y-axis on my chart before I start trading forex and stocks (other markets as well). Doing so creates consistency day to day. I’ll discuss why that is in the next section. First, how to determine what your y-axis should be set at, and how to adjust it.

Forex Y-Axis for Day Trading

I always set my Y-axis on my EURUSD day chart to the average movement of the pair over the last 10 weeks. I do this immediately upon logging in. That way, I can instantly see if volatility is higher or lower than normal, and I can adjust my trading and expectations accordingly.

Mataf provides the 10-week average of how much the EURUSD moves per day.

As of October 17, 2024, average daily movement is 60 pips. This will change over time.

It is this amount that I use as my y-axis, rounded to the nearest 5 pips or so. For example, if it says the average is 71.2 pips, I will set my y-axis at about 75 pips. If the average is 124 pips, I will opt to set my y-axis at about 125 pips.

Since the average is calculated over 10 weeks, this number isn’t going to change much from day to day. Therefore, I only check it every couple of weeks. That means my y-axis stays the same for a couple of weeks in a row…and quite often for months in a row since overall volatility may not change much.

Stocks Y-Axis for Day Trading

If I day trading stocks, I set my Y-axis to the daily average movement of the stock.

Each week I update the daily average movement of the stocks I am day trading. I watch up to four stocks at a time. They usually have similar volatility, so I set my y-axis on all of them to the same scale for easy comparison of movement each day.

Here is an example of the list. These stocks are all moving in the vicinity of 10% per day. Before the trading day starts, I adjust my y-axis to approximately 10% on all the stocks I’m watching. If the stock you are watching typically has a daily average movement of 4%, then scale your y-axis to 4%.

How to Adjust Your Chart Y-Axis

To measure and set your y-axis, run the measurement tool from the bottom of your chart to the top. It should measure approximately the distance you want. If not, adjust the axis. In many trading or charting platforms, you can adjust the y-axis by clicking and holding on the y-axis and then moving the mouse up and down.

Alternatively, you can just look at the prices near the top and bottom of your chart (y-axis). The distance between those prices should be roughly the scale you want on your chart. For example, if a stock moves $1 a day, then there should be a $1 difference between the top and the bottom of the y-axis. If a stock moves 5%, there should be 5% between the top and bottom of the y-axis.

The whole process should only take a few seconds once you are used to it. Well approximated is fine.

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Why Set Your Y-axis Before Day Trading?

When you open your charts or log in to your trading platform, quite often the chart is zoomed in on the recent price action. If the price has only moved 10 pips in the last couple of hours, the chart’s y-axis will typically only show 10 pips. The price action will fill the screen.

If you’re trading a stock, and the stock has only moved several cents, that is what your chart often zooms into.

This makes it look like there is lots of movement and nice trends. But this is a visual illusion. If you keep your scale at the daily average movement (or more if needed on some days) you will be able to instantly see if this is a typical day, or if volatility is lower or higher than normal. This process creates a visual baseline each day.

Don’t think it makes a difference?

Look at the following two examples. The average movement was 67 pips per day at this time, so a scale (y-axis) of 70 pips is recommended.

Upon logging in, this is what my charting platform showed me. Without close inspection of the y-axis, it actually looks like there’s quite a bit of movement! Some nice trending moves!

Charts from TradingView

If someone wasn’t paying attention, they could be lured into a trade, thinking there is lots of movement.

Below is the exact same chart, but with the y-axis now scaled to show approximately 70 pips. An entirely different perspective! Are you still as inclined to trade? I hope not. We can instantly see that the price is barely moving at all. It is easy to get chopped up paying spreads and commissions very easily.

Take away as many traps as possible before they occur. Setting your y-axis before you start trading is one way to maintain visual consistency from one day to the next, and thus potentially avoid getting lured into poor trading opportunities.

And to be consistent in your trading, try to keep as many consistencies as you can from day to day!

By setting my y-axis to the average daily movement, immediately upon logging in, I can instantly see if a day is more or less volatile than usual. My y-axis doesn’t drop below the current average, but I will expand it if needed to be able to see the whole day’s price action. For example, if the price has moved 100 pips today, I will expand my y-axis so I can see the highs and lows on my chart, even if the average (and thus my scale) is 75 pips. Even then, I will usually keep the scale at what I am used to seeing.

Examples of Scaling the Y-Axis and How It Helped Me

Here is a stock example from November 27 2023. At that time, these stocks I was trading were moving roughly 8% per day….so each y-axis is scaled to approximately 8%. This not only allows me to compare how a stock is moving relative to its normal movement, but I can also compare movement between stocks…visually, and very quickly.

When the stocks open, I can visually see which ones are moving more without needing to measure. That doesn’t always mean you will nail your trades or that your strategy will be able to capitalize on the movement. Here I didn’t make much, but because everything is scaled the same it makes it much easier to decide which stocks to trade…the ones with movement!

Another stock example. Here everything was moving, providing lots of opportunities. When the chart is scaled and the price moves start filling up the chart I know there is movement to capitalize on.

Below is a forex example of a day when average volatility was around 120 pips. I set my y-axis close to that.

It was lower movement when I started (first vertical line), but then we started getting more movement, which tells me this a normal movement and I can trade as such.

This day produced more than 11R in profit (11% if risking 1% of the account per trade).

For the day below, average movement was 71 pips. The y-axis is scaled to about 75 pips. Instantly when I started trading (vertical line) I could see this day was dead. That instantly puts me on the defensive. I only took one trade after a big move came in.

How to Scale Your Y-axis for Day Trading – Final Thoughts

Each day presents different opportunities. Knowing what the average volatility is, and then having my y-axis set to that, helps me instantly see if I should be day trading cautiously (defensive until movement comes in) or if I can trade more aggressively to capitalize on the movement. A simple trick, but I find it helps.

Run a measuring tool from the bottom of your chart to the top to see if it aligns with typical movement. If not, adjust the y-axis.

If you find scaling your y-axis helps you, then use it. If not, don’t. The beautiful thing about trading is we get to create our own rules for how we trade.

Want more simple tips like this to help you crush the forex market?
Check out the EURUSD Day Trading Course. It covers everything you need to day trade the EURUSD in two hours or less, including strategies, routines, and mental-game work to get you into the profit zone.

By Cory Mitchell, CMT

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.