In this episode of Truth About FX, Walter talks about the key points when looking at trend entries — and even exits.What kind of system are you trading? Which timeframe suits your lifestyle? He also talks at the different opens and how each one differs from another.
Download (Duration: 02:34 / 2.94 MB)
In This Episode:
00:32 – it depends
01:22 – the bulk
02:08 – doesn’t matter
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. When is the best time to enter a trade?
Walter: Well, that is a loaded question. If I’ve ever heard one, that’s pretty funny. It depends on what you are trading. It really depends on the system. If you are trading a breakout system, you’re probably looking at trading on the lower timeframes.
When I say lower, I mean like an hour or under. You’ll probably be looking at around the European open, London open, that’ll probably work, or possibly the New York open. If you are trading daily charts, I have a found and many of my students have found and they’ve posted all their data as well that shows that if you are trading the daily charts, you probably don’t want to get in on a Monday or Friday.
Also, if you are trading the weekly charts, you probably don’t want to get in on a Monday or Friday. You should test yourself and see this for yourself but, typically, we’ll see the high or the low of the week may kind of in those Asian session on those Fridays and Mondays.
What those means is the bulk of the weekly candle, which is what you are trying to take advantage of as a weekly chart trader or a daily chart trader, the bulk of that is usually in the middle of the week.
Those large moves, it’s not perfect, okay. Sometimes, the market’s going to go and make the high of the week on Wednesday or whatever but, then maybe the low of the week was made on Monday.
So, these are the sorts of things you need to look at if you were trading some sort of trend following system. Maybe it doesn’t matter as much if you have the long term point of view.
Maybe you get clicked in on a Monday and it retraces and then you end up being okay two weeks later or something, I don’t know. Really, the easiest way to know is based on what kind of system you are trading.
So, if you’re trading a swing trading system, it probably does not matter as much. Like, let’s say if you are doing a 4-hour swing trading system, it probably does not matter as much an 8-hour chart swing system. But, if you are trading the daily or the weekly, I would say stay away from Monday or Friday.
If you are trading the breakouts, I would definitely say, look at the opens. The open of the London, the open of New York.
Hugh: Okay, cool. Thanks, Walter.