Saturday, June 11, 2011

“Trading is never without risk, but the length of time for which you accept that risk is under your control. When you’re able to control events, the probability of you making money increases dramatically.” – Jim Augustine


It’s believed that trading can be more profitable in some periods than others. For example, the London session is the busiest trading session, followed by the New York session. It’s also noted that most market movements occur in the middle of the week, i.e. Tuesdays and Wednesdays. Some educators encourage traders to trade during the London and/or New York Sessions only; they encouraged their students to carry out most of their trading activities during the middle of the week. Moreover, they advise traders to desist from trading on Mondays and Fridays, because of thin and often unpredictable market movements.

It sounds logical to trade during busy sessions and when the markets are most likely to move very well. But does this guarantee success?

This was part of what I learned when I was getting my feet wet, and I traded only during the busiest sessions and days. As a novice, I didn’t know that the secret to success is disciplined psychology and risk and money management, not any trading systems, whether manual or semi-automated or fully automated. In spite of trading during the recommended sessions and days, my trading results were a mess.

This flies in the face of what the majority tend to believe: I discovered that all trading sessions and days are unpredictable – not only Sundays, Mondays, Fridays and Asian sessions. The market may even move powerfully when it’s expected to be quiet. It may be quiet when it’s expected to move powerfully. What brings losses for some on Mondays or Fridays also brings profits for others the same time. The busiest sessions and days that seem predictable may also move against you massively anytime and damage your account if you don’t cut your losses. Contrary to the impression some analysts and educators are trying to give, the trading world gasps at the unpredictability of the markets.

Some traders go for a few pips per trade; some go for hundreds or thousands of pips.

Certain traders open and close their trades in a matter of seconds. Some trade during Asian sessions only – carrying out short-term raids in the markets. It isn’t uncommon for some professionals to get the trend movement and speculate on the range for a pair/cross from London opening… and set their plans for intraday trading and wait to execute it around New York opening time. Some traders open new positions at the opening of the markets on Mondays and smooth them on Fridays. Some buy bull markets at the open and sell them at the close; buying bear markets at the close and selling them at the open. I follow gap trading signals on Mondays, at the close of the New York session and ride the trades for 2 weeks. I ride my swing trades for 2 weeks as well; whereas I ride position trades for as long as possible - months. My hedging trades are placed immediately the market opens and they’re ridden for as long as possible, until the exit criterion is met.

There’s no better time to trade. It doesn’t matter how you trade and when you trade: what matters most is how you manage the trading risk and your money. Traders need more than strategies and market analyses. They also need to apply sound risk management. Any trading activity whatever that’s short of safe risk control measures is tantamount to gambling. A good trading risk and money manager can survive and move ahead despite any market days and conditions.

NB: Please watch out for my coming articles with these titles: ‘Resist the Lure of High Risk – Part 3,’ ‘Carrying Out Stealth Raids in Weak and Strong Markets,’ ‘Worst-case Scenarios – Facts Are Sacred,’ ‘Effective Swing Trading in Forex,’ ‘Advanced Gap Trading – Trading with Insane Accuracy,’ ‘3 Recent Gap Trades,’ ‘Trading for a Livelihood – One of the Best Jobs in the World,’ ‘If I Were a Trading Neophyte…,’ ‘Developing the Right Attitude towards Losses (Part 2) – Coming to Terms with Reality ,’ ‘The True Holy Grail – The Long Sought for,’ ‘Achieve Success through Sensible Risk-to-reward Ratio (An Interview with a trading Enthusiast),’ ‘The Change from 4 decimals to 5 Decimals,’ ‘Monthly Trading Report (June 2011),’ etc.

I end this article with a quote from Joe Ross:

“…Some traders may work under the false belief that merely by making a bunch of trades they can increase their odds of success. They wrongly assume that they can make any trade for any reason, and that the more trades they make, the more profits they will realize. Even though you have to risk money to make money, and similarly, you must execute trades to make profits, it doesn't mean that just putting on trades guarantees success. Obviously, you must use trading methods that are viable, and use them under those market conditions where they have proven effective in the past. It's important to remember that you must carefully monitor market conditions, and apply a trading method when it is likely to produce a profit…”

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

Senior Analyst

FX Instructor, LLC


Yahoo! Messenger ID: saazalmu

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NB: There is risk of loss in trading, but it is possible to be a successful trader.

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