Forex trading is one of the most prominent and influential markets in the world. The reason behind such an enormous trading volume and influence of FX lies in its decentralized trading system, and its five day a week working policy.
As the industry is open for settling any size of deal on most calendar days, people see it only as an opportunity and try to exploit it to its maximum level. But what they cannot realize is, exceeding placing of trades often boost up the business cost, shows unauthentic signs, and leads to losses.
In the CFD trading business, knowing when not to place any more order is equally as important as knowing when to proceed.
In this article, you will get an essential guideline on when not to pursue deals.
When You Need to Think More Than Usual
Great deals will come right at you, and you will feel them by heart. They reflect a favorable possibility on statistics. You will detect them the moment you look at any chart.
A profitable deal always can be defined with “pattern recognition”. A professional broker who possesses deep understanding over different types of patterns can distinguish distinct attributes between a maximum probability setup and the one with lower probability.
When a setup or pattern causes you to meditate for a long time to understand it, you should ignore the trade. Look here and study the post of the elite Aussie traders at Saxo. Soon you will learn the importance of having a simple trading strategy.
During Bank Holidays
Banks do not process any orders on holiday. In the CFD industry, Banks play a large part, and they are often considered as an environment determiner. You will notice a fall in the gross trading volume on a bank holiday. Liquidity, patterns in the price action and other characteristics that expose probabilities get skewed during this time.
Currency pairs move modestly on Bank Holidays, and it makes transaction cost influx and spreads wider. A scalper or a day trader can’t hope to get anything out of Bank Holidays.
When the Situation Seems Unexpectedly High or Low
Many traders look for overbought and oversold situations. They hold them as infallible determiners of the future-trend. You may find yourself biased in favor of such ideas.
If you use terms like “too high” and “too low” to indicate a system’s long period of favorable or adverse condition, you are already affected by the above-cited notion. In reality, an “overbought” or “too high” signal does not indicate an imminent fall. On the contrary, it shows the market is robust and has the potential to stay in position.
During Illiquid State Hours
There are some specific market hours when liquidity used to fall. It causes business costs to go higher and stimulates slippage into the profit. Being an over the counter industry, the Forex industry runs during trading sessions. They span around the globe, making them the most crucial market catalyst. There are four sessions in Forex trading, and they all inject an equal unit of liquidity in the market.
It would be wise to look out for a period of less liquidity and brace yourself from making any trades.
During Personal Critical Situation
Trading will require your 100 percent concentration. If any portion of personal life makes you to be anxious, distressed, inattentive, and out of control, you better take that day of and take ample time to get yourself together.
A person takes wrong decisions and imposes risks on his business if they are in an emotional condition.
Once you have pinpointed all the reasons not to trade and can’t detect any of them in a market condition, you can go ahead and place an order.
You may develop characteristics like perseverance, patience on the progress of your exchange marketing journey. But if you don’t know when to persevere and be patient, this experience will be in vain