Why RELAXING on the weekend makes you a better Forex Trader!by Timon Rossolimos
What did Chaleb do wrong?
On Friday I spoke to my friend Chaleb. He was trading the Euro Dollar and felt very confident of his long position.
The currency was in a nice uptrend and, while sipping his coffee, Chaleb was telling me how the Euro would continue going up…
And looking at the chart, I couldn't disagree…
But nobody has a crystal ball that can predict the future…
Monday came and Chaleb was as stressed as ever. He told me 'Timon, I can't even stomach a cup of coffee today. This morning I woke up with a huge chunk of my portfolio wiped away'…
You see, Chaleb's actually a day trader. And deciding to deviate from his day trading strategy and keep his position open over the weekend, no matter how good it looked, was a bad move to make…
And today, I'm going to reveal four simple tips you can follow to make sure you NEVER end up in the same position as Chaleb.
Following this means you can literally relax over the weekend and become a better Forex day trader…
So what exactly transpired on the weekend?
Well, on Saturday 16-March-2013, Cyprus spooked the markets worldwide. The Eurozone finance ministers and the International Monetary Fund made an unprecedented announcement.
The government contemplated taking 6.75% of all small deposit accounts and 9.9% of all large depositor accounts from all Cypress bank accounts. They planned using this to fund part of the 17 billion euro (R202 billion) bailout Cyprus needs to stay afloat.
When Chaleb woke up after this news, he was shocked to see the news. And there was nothing he could do about it over the weekend. He had to wait till Monday to exit the trade.
This, and surprise moves like this, cause distress to the financial system. And this was evident when markets opened on Monday morning. The Euro took a big hit, dropping 165pips at the open.
This could have been you if you didn't follow your strategy and held a position open over a weekend when you shouldn't have…
'Black Swan' events can affect your bank account
I told Chaleb, by keeping trades open over the weekends, he was moving away from his trading strategy of day trading. Doing this meant random events, known in the industry as Black Swan events, like this could ruin him.
I told him out of my nine year trading experience, these 'Black Swan' events happen numerous times every year. And each event is completely different to the next.
Over the weekend, you could never have predicted the announcement that took place. And if you had a position open over the weekend, you would have incurred unnecessary losses.
That's why I use these two tips to keep me protected and make me a better day trader.
Two simple tips on becoming more successful while day-trading Forex
Forex Tip #one: Close your Forex trade at the latest by 8pm on a Friday. This way you'll have a nice strict time to stop trading which can prevent you from holding a Forex trade over the weekend.
Forex Tip #two: Don't be smart and jump into a Forex trade first thing in the morning when the market opens the next week. The market still needs to digest the news that transpired over the weekend.
Remember, if you're a Forex day trader and you appreciate the high probability low risk trades, this article is for you. However if you are a medium- long-term investor and making money in the Forex market then keep at it.
There are many traders that can trade 'Gaps' and hold Forex over the weekends successfully so this article will respectfully not apply to all of you.
The point here is that you need to stick to your trading strategy. And if you're a day trader, then stick to day trading.
By following these two tips, you can sleep soundly over the weekend knowing you're not holding any positions in the Forex market.
'The key to wealth is by enlightening your mind'
Editor, Trading Tips