How to Plan Your FX Week

Posted by admin 11/09/2013 Comments are off 1213 views

How to Plan Your FX Week

When you trade forex you may be tempted to trade as much as possible simply because you can.  The forex market is open from Monday to Saturday afternoon which gives you a lot of time to trade.  However, you should not trade as much as possible because this can lead to overtrading and making mistakes which lose you money.  It is important that you plan your FX week before you start trading to avoid this.

When Should You Trade in the FX Week?

The first step to planning your FX week is determining when you should be trading.  There are certain times and days when certain pairs trade well.  You have to identify these times and work your schedule around them.  The rule of thumb is that the market is most volatile during session overlaps and domestic currencies move more during their market sessions.  This means that the US dollar trades better during the North American session and when this session overlaps with the European session.

Once you know when your currency pair will trade well you can plan all your analysis around this.  It is important that you complete your analysis of the market as close to your trading time as possible.  This lowers the chance of anything happening between your analysis being done and the position being opened.

Make a Note of Forex News

If you are trading fundamentally then you have to take note of when news events are taking place and the effect they may have on the market.  If you are trading technically you should also take note of these times.  These news items may affect the market and you have to be prepared for this.  You should set reminders about high impact events that are coming up during the week.  You then have warning so you can close open positions that could be affected before the news release.

How Long You Spend Trading

Another part of planning the week is planning how long you are going to trade for.  It is not recommended that you trade for long hours uninterrupted because this can lead to mental fatigue and emotional errors.  You should schedule ten minute breaks into your day so you have a break in your trading.  These breaks help keep you alert and give your body a break from the computer.

You should also trade for a limited number of hours per day.  It is possible to trade for the market session your currency pair does well in but this generally lasts longer than your average work day.  If you are new to trading you should build up to spending long hours trading.

What about the Weekend?

As the forex week ends on Saturday many new traders think that they have the rest of the weekend off.  While this is true to a certain extent there are some things you should do over the weekend.  The weekend is the best time to plan the upcoming week and review all of your trades.  This should not take you can entire day so you do have one day off on the weekend.

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