Normally, jobs require you to do more, be persistent, and put in effort. While this is true for most jobs, trading is not one of them.
Trading is actually all about timing. And despite the truth in the phrase, trading more means more opportunities, it depends. To expound on these points, you must first understand that not trading is also a trading strategy. By not trading you are preserving your assets which you can trade when there is a better opportunity. Every trader must know when to trade and when not to trade. Here are some examples when it is recommended for you to sit back especially if you are a beginner at this.
During an Upcoming Speech
It is generally ill-advised to trade on a volatile market. The erratic movements increases the chances of loss for the trader. And one of the most common causes of volatility is market speeches. You can prepare yourself for these events by keeping updated with forex news portals. There articles and announcements will be made if there are upcoming speeches, especially if it’s going to be made by a leader of a central bank. These important people include the US’ Federal Reserve Bank head, Janet Yellen, the president of the European Central Bank, Mario Draghi, Bank of England’s governor, Mark Carney, and Bank of Japan’s leader, Haruhiko Kuroda. These are just some of the important heads of central banks which you should pay attention to so know which heads you should be wary of. It is crucial that you avoid volatility, especially if you’re new at trading. Instead you should anticipate the market’s movement after these turning event as it will usually pave way to a clearer and more predictable price movement.
During These Times
Predicting when not to trade can sometimes be tricky as you have to first do some research and get a feel of the market mood. However, there are definite times that are highly recommended for you not to trade and they are regular occurrences throughout the year. The first one are holidays. During bank holidays, you are not allowed to trade so you can really do nothing about it. If the holiday is overseas then it is advised that you not trade the currencies of the banks affected by that holiday. The reason behind this is because banks are the biggest contributors in the Forex market so their absence will create a big impact on the trading volume thus causing a probable volatility to the market. Another time that is ill-advised to trade in is during the opening and closing times in the market. The same logic follows as these times are where trading positions are closed or opened which causes volatility. Yet another time when it is not recommended to trade is during the month of December and Summer Holidays. This is because these times are when most bank staff, private traders, and market participants take their holidays. This means that there is a slow down in the market due to fewer participants.
During Emotional Times
Being a emotional trader is one of the best ways to get bankrupt in this profession. One of the most essential traits of someone in this industry is their capacity to control their emotions. Because if you let your emotions get the best of you then you are headed for your doom. For example, you lost in a trade and to compensate, you immediately trade again in the hopes of a better outcome. However, because of you traded just because of your desire to get back what you’ve lost immediately then chances are you’re gonna lose that too. What’s more is when you trade while in an emotional turmoil. For example you’re having a bad day or something unfortunate happened such as breaking up with a partner or family issues or getting in a fight with someone. Whatever it is, if you trade with your mental health not in the best shape, then you’ll lose more than you can afford. Trading requires all of neurons working especially because it is done with split-second decisions and well thought-out strategies. Again, never trade emotionally!
In general, what you need to remember in trading is that it’s not always more and more. It’s also about moderation. So trade with care and be smart about your decisions.