It is of utmost importance to understand the time that you choose to trade in and know what you potentially expect at that time of day. This differs from instrument to instrument so it is important to study market behavior for your particular instruments. I usually trade only 2 instruments the DAX and the GBP/USD and I am pretty familiar with their behavioral patterns during the trading day. Other instruments behave differently and I will only trade them (and I do occasionally trade WTI, Nat Gas, and other currencies) after I've studied their time related behavior. Most of my trades outside of the DAX and GBP/USD are news related and of course, when figures are released a different volatility exists which usually out of the normal patterns.
The best time to trade the DAX is close to the London open at 08:00 (03:00 EST) as the open usually brings a large surge in volume and it's and easy time to scalp. Sometimes the scalp will turn into a longer term trade if a trend develops, however it is often possible to achieve a gain of 20 - 40 points in the first half hour of trading. As my daily target is 30 points and it is often hit within 30 minutes, I can then relax and look for absolutely perfect set ups that will not risk the gain. Another good time to trade the DAX is around 13:30 UK time (08:30), but need to watch out for any news announcements as this is the time most US releases come out (CPI, GDP, NFP etc). It it a pretty volatile period and once again it's easy to capture good moves then. I have a method that I use to make a good living from just trading the open, however it is intuitive/instinctive and is difficult to describe, I've been using it for years and have developed a gut instinct for it. At some point I will go through a month or 2 of trades and try to verbalize it. In the meantime I'm come across a site that claims it has a mechanical set up for the open. I haven't looked at it yet, but will soon, I generally buy quite a few systems to test out. And as this one guarantees your money back if you don't profit on the first trade may be worth $67 (Trading Stock Indices). My library shelves are full of trading books and my C drive packed with ebooks and systems I've tried, most are useless but once in a while you get a decent one.
About 1 hour after the markets open (London and NYC) we usually see some consolidation and I tend not to trade these periods, it can be quite frustrating. I'm sure you've noticed how fast the time goes by when you are in a trade that is going against you and how slow it is when a trade you've entered just hovers around breakeven. Chances are that it's the same length of time, it's just our mind playing games with us. As far as I'm concerned, I look for a trade to move my way within 2 bars (1 min, 5 min or any other time frame you trade). If it doesn't I'd rather close the trade and wait for a better opportunity. My experience is that if a trade doesn't move your way quickly, it is a less probable trade. Practice patience in entering a trade and not after you've entered it. If you've taken a scalp and it's at a good swing point and it moves your way, once you've made it a risk free trade you can let it run. Most instruments don't turn on a dime, but most have reversal points that often occur at regular times, keep your eyes open and move your stop accordingly. Forextrading system Reviews
Timing is a separate issue and depends on your trading method, one of the methods I use, is reversals at known pivot points. This is pretty much a rubber band type of trade and often one can catch a reversal and a new short term trend. In these cases, as with scalping, if you have a prticular price area in mind, timing makes a big difference, If you enter too early you may get stopped out quickly and if you enter too late you will miss out and possibly get stopped out as the momentum traders want the momentum to continue. I do occasionally set a limit or stop order at the price I anticipate the reversal but mostly I watch the action and enter manually so that I don't enter a waterfall or rocket. This is one of the main problems of robots, a robot may initiate a trade at a good level but at a bad time. As your stop is not guaranteed you can easily wipe out a few days wins in one single trade. For example, some unexpected news comes out and everyone runs, at least if you're actively trading and have a squawk box (you should, as a day trader) you stand a better chance of making an emergency exit and maybe even reversing. I've seen currencies shoot up 100+ pips in seconds as a result of some news about a central bank intervention, with a robot you could easily lose the lot. Basically the thing about timing is that if your set up happens, get in, there and then, no hesitation and manage the trade accordingly. How many times have you kicked yourself (or the cat) for not sticking to your set up? My stops for most of these reversals are pretty tight, and as they work out over 60% of the time they pretty much form the bread and butter of my trading.
Bottom line, remember that trading is 90% in the mind and if your mind is cluttered or you're not in a good state it's best to avoid trading, better to recover, get yourself back together and then go back. For those of you who have been reading my posts, you know that I am a great believer in meditation, and always make sure I am completely calm and confident before I trade. Lately I've been using this subliminal video and I find it's pretty good, 10 minutes of watching and I am ready to make money easily.
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