Forex Market Holiday 22/04/2011
Hello Traders! As I mentioned yesterday I wanted to at least show up in the forex room and see what type of price action the forex market would offer today, being it is a banking holiday. During holiday’s the forex market will give you one of two types of price action. One is what we saw today, which was a stagnant marketplace with not much movement or conviction in either direction. The other is a fast moving volatile fx market.
We will be trading Monday even though it is a banking holiday as well. In my opinion it is at least worth seeing how the market is moving before completely throwing it away as a lost trading day. Most view holidays as only range bound days and therefore simply dismiss them. However think about this. When there is less volume in the market it takes less money being moved to push the price through support or resistance because there are less orders around these levels. Therefore as mentioned above, you get the occasional bank holiday with great intra-day price action.
Weekly Wrap Up : Overall we ended +2.5% up for the week, which brings us to +9.5% up for the month of April currently. Even though we were net positive for the week, it was a very rough trading week in my opinion. There was a lot of strange price movements, various false breakout, and general lack of conviction during the US trading session. Because of this we mostly used smaller positions this week, which helped maintain a modest profit for the week.
It’s tough trading weeks like these that make me think of golf and how much alike forex trading is to it. Think for example of Tiger Woods, and what makes him the best. It’s not Tiger’s swing, his putting, or his great short game that make him what he is….but rather it is his super human ability to never break mentally. Look at what happened a few weeks back at the Master’s. Rory goes into Sunday with I believe a 4 shot lead and completely implodes, ending the day way back of the winner. It’s not that Rory isn’t a great golfer because he is, its that he doesn’t have the same mental ability to stay composed in the face of adversity as Tiger does.
Keeping that analogy in mind, lets apply that to the forex market. As a day trader you must remain poised. The first initial reaction after a losing trade for most new traders is to double the trade size and “get back at the market”. Often the result is double the loss. The point is you have to be able to stick to your trading plan and money management no matter what happened with the previous trade or trades. For example on Wednesday we had 2 small losing trades before the +130 winner on the EUR/JPY. Had we let the other 2 losses get to us, break our confidence, patience, or discipline we would have more than likely never gotten into that trade. The past is the past, you can’t change it nor alter it in any way shape or form. Therefore it is critical to learn to trade forex in the moment without focusing on the past and you’ll be a better forex trader because of it! I hope this little bit of information was beneficial, and I will see you all after Monday’s trading session. Have a great weekend and be safe!