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Don’t Leave Yourself at the Mercy of the Forex Market

18 Years ago | May 26, 2014 10/1/22, 12:00 AM

Time should be a factor you consider when trading and when ignored, it will leave you at the mercy of the forex market and other global markets. What I mean by that is that you can put yourself in a position where your options are to take on more risk than you are willing to take if you ignore the time factor when trading.

 

Leaving Yourself at the Mercy of the Market

The following are examples of leaving yourself at the mercy of the market:

1)    The most obvious place is ignoring upcoming news events, such as a central bank meeting or key economic report and trading purely by the charts. The market will setup in advance of key events and if you are on the wrong side, then you leave yourself in a position where time is not on your side. You are left to decide whether to run a position into a key event (i.e. roll the dice) and take on more risk than you are prepared to take or get out. This is an example of leaving yourself at the mercy of the market.

2)    Trading is about staying power and giving your trade time to work. You give this up when trading against the prevailing trend where you have to stop out if a new high or low is made as you do not know how far the market may move. In this case, you leave yourself at the mercy of the market to run your stop as you have left yourself without staying power for your trade unless you are willing to take on what is probably more risk than is justified by the trade.

3)    Running a position on a Thursday can leave you at the mercy of the market on Friday if you are not willing to carry a position over the weekend. In this case, time is not on your side if caught on the wrong side of the market. You can hope the market comes back to you on Friday but if not, then it is as much a matter of time running out before the weekend than the merit of your position. Therefore, consider the weekend factor when running a position from Thursday. Take this into account as well when trading on a Friday unless you are confortable carrying the position into the new week.

4)   Putting in what I call a dumb stop leaves you at the mercy of the market but that is for another discussion (see my article Avoid Dumb Trades and Dumb Stops

This just scratches the surface but you can see what can happen if you leave yourself at the mercy of the market.

 

Jay Meisler, founder

Global Traders Association

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