12 Sep Best time to trade

When is the best time to trade?

When is the best time to trade? This is some­what of a per­son­al ques­tion. I believe it depends on a few cri­te­ria. Where are you locat­ed? Where is the exchange locat­ed that you would like to trade on? What kind of a trad­er are you (ie. scalper, day trad­er, swing trad­er, or a posi­tion trad­er?). The first two are impor­tant to answer, the third one as well although you might not know at this very moment what kind of trad­ing suits you best. So before we get started….

DISCLAIMER

Like you, prob­a­bly, I am learn­ing how to trade. I don’t claim to know any­thing. What I do claim is that I will be a suc­cess­ful trad­er. I am con­fi­dent that I will be one because I am putting in the time and effort. If I can’t become one, it’s because the game is rigged and I was nev­er able to be good at it any­way. And basi­cal­ly the bot­tom­line is… It’s nev­er my fault 🙂 

BECAUSE THE GAME IS RIGGED!

Obvi­ous­ly, I don’t believe this.

This series of posts are my per­son­al approach­es to under­stand mar­kets and trad­ing and in the end my path to suc­cess. So if you can be hon­est about your sit­u­a­tion as I can be about mine, we can do this togeth­er and get crack­ing. If ‘they’ can do it… We can.

After all, you can’t be a good trad­er if you are not com­plete­ly and bru­tal­ly hon­est with yourself.

This series is called ‘The Hon­est Secrets to Trad­ing’. I call it this because Yes, it is a ‘click­bait’ thing. Part­ly. How else can I get your atten­tion amid all these oth­er guys. But I also call it this because I will show you in all hon­esty what my approach to learn­ing this craft is. Because I am look­ing for these secrets as well. Just like you. I am putting in the time. Are you?

Gen­er­al­ly, you will find a com­mon theme through my arti­cles and that is GOOGLE for your­self. Don’t know a term that I’m talk­ing about? GOOGLE it. I’m not here to tell you all there is about trad­ing. I am here to tell you how I learn and how you can start learn­ing by your­self. I hope you can appre­ci­ate that. 

Here it goes…

Loca­tion Loca­tion Location

As the terms in real estate goes, it’s all about loca­tion loca­tion loca­tion. Well, not quite the same for trad­ing but it is impor­tant. I hope you know where you are locat­ed so you at least have one part of the equa­tion dealt with. Now find out where the finan­cial instru­ment you want to trade is being trad­ed. In my exam­ple I am going to use WTI crude oil because that’s what I trade. 

A sim­ple Google search ‘where is wti crude oil trad­ed’ tells me it is being trad­ed on the New York Mer­can­tile Exchange (NYME) as an under­ly­ing futures con­tract. How­ev­er because Forex and com­modi­ties are not bound by the trad­ing hours of the New York Mer­can­tile Exchange, I can trade these futures con­tracts 23 hours/day 5 days a week as I men­tioned in anoth­er post before.

For me it means it’s a bit eas­i­er to trade since I am not bound by con­ven­tion­al trad­ing hours. Let’s say I were to trade stocks on the New York Stock Exchange I would have to be trad­ing them with­in its trad­ing hours. Which would make it more dif­fi­cult since if you are not locat­ed in the same time zone (or at least close to it). 

Now fig­ure out what your time zone is and that of the mar­ket you would like to trade. Now you have the time range fig­ured out that you can be trad­ing in. 

Rush hour

Know­ing when the store is open is just anoth­er part of the equa­tion. Where some peo­ple would try to avoid the big mobs head­ed to the store, oth­er strive. I know. Doesn’t make much sense right?! Most peo­ple like to avoid the busy­ness of shop­ping if they can. In trad­ing how­ev­er, that’s what I am look­ing for. We call it volatil­i­ty. The big­ger the volatil­i­ty, the more action. And oh man!!! We LOVE action. Well, I do. 

Detour

So how do you go about fig­ur­ing out when those rush hours are? Well, I took the longer road think­ing I would be onto some­thing. It turns out that I could have done it eas­i­er. Hav­ing said that, there are def­i­nite­ly valu­able insights to be had from look­ing at past price action. I looked at ana­lyz­ing what I call the ‘big rever­sals’. Read here on ‘how to ana­lyze his­tor­i­cal price action’ and here on ‘under­stand­ing the big rever­sals’. 

The short­cut

Take a look at the week and observe when big moves hap­pen. Or, look for news events that can influ­ence your finan­cial instru­ment and look for cor­re­lat­ing price moves in the charts. Take note of these and get on with build­ing your trad­ing sched­ule around them.

Make a trad­ing schedule

Now that you have deter­mined where and when you can trade, you can now go and put togeth­er a trad­ing sched­ule. I like high volatil­i­ty so that is what I am going to base my trad­ing around. You have to deter­mine that for your­self. Because I trade crude oil futures I like to trade around the reports from the Amer­i­can Petro­le­um Insti­tute and the Ener­gy Infor­ma­tion Admin­is­tra­tion. See what fac­tors influ­ence your trad­ing game and try to sched­ule around it. 

Kinds of traders

So I talked about the dif­fer­ent kinds of traders. The scalper basi­cal­ly gets in and out a posi­tion in mat­ter of sec­onds to min­utes, a day trad­er opens and clos­es them, as the name sug­gests, with­in the day. A swing trad­er takes trades that last a few days to weeks. Last­ly a posi­tion trad­er is a trad­er that I like to look at as more of an investor. The posi­tion trad­er will hold trades for a longer peri­od of time. For more infor­ma­tion please go here https://www.babypips.com/learn/forex/summary-what-type-of-trader-are-you

Why does this mat­ter to your trad­ing game? I think it’s plau­si­ble to believe that your time frame strat­e­gy is some­how relat­ed to your trad­ing sched­ule. Again, this is for every­one per­son­al­ly to find out.

Play­ing Chess

How­ev­er, there are dif­fer­ent ways to build your strat­e­gy around it and I’ll def­i­nite­ly go into deep­er in anoth­er post. What I can tell you now is that I com­pare trad­ing to a chess game of sorts. Any giv­en week is deter­mined by a few fac­tors that give the trad­ing game a cer­tain set­up. Just like in a chess game, there is an open­ing, mid­dle and end game. These all require dif­fer­ent strate­gies for trad­ing them. Like I said. I’ll dive deep­er into this in anoth­er arti­cle. If you would like to be kept up-to-date, please sub­scribe. Or not. I’m get­ting back to my chess game. Or trad­ing game. Whatever 🙂 

Thank you for reading

Please sub­scribe if you haven’t already. Let me know what you think in the com­ments below. Unleash your neg­a­tiv­i­ty upon me! All good. Thanks for read­ing and hap­py trad­ing to everyone.