Forex markets are highly liquid and can be traded 5 days a week, 24 hours a day giving thousands of profitable opportunities for enthusiastic traders.
So much so that when the weekend comes, the obsessive forex trader may not know what to do with himself. If you find yourself with nothing particular to do at the weekends and sometimes wished markets traded 7 days a week, use the time to your advantage. The weekend is the perfect time to plan for the upcoming week.
Guest post by FXTM
Catch up on analysis
When markets are in full flow during the week it can be hard to follow everything that is going on. Trading takes up a great deal of time and any decisions need to be made quickly.
The weekend is therefore the ideal time to look over any interesting price moves that occurred during the week. It is a time to update your spreadsheets, to go over your previous trades and to read any interesting news stories or articles.
Every Friday, the Commitment of Traders Report is released, so you can use the weekend to study this report and analyse how many traders are positioned short or long of each currency pair. This work will be invaluable in letting you analyse where the bias is in certain markets and whether you want to trade with the crowd or against it. That is a personal decision that you will have to make.
Identify catalysts
The next step is to have a look at the economic calendar for the week ahead and make a note of the big market releases. Some will have little effect but others will lead to big market moves. Make a note of what the market is expecting and make a plan of action that involves detailing how to trade ahead of the release and how to react when the release comes out.
Tune in to the markets
Above all, the weekend is the perfect opportunity to retune yourself with the markets. Look at how prices reacted to certain events during the week and you should be able to find a bias as to which way markets are headed.
For example, if there was a lot of positive news for EURUSD but the currency did not go up, the bias is probably bearish, and if bad news comes out next week, the currency may well drop.
Understanding the expectations of each market and how traders are positioned will allow you to align yourself in the direction of the trend. You can then choose which markets are trending the best and discover whether any important technical price levels are coming up.
In this way, you can set up trading plans for each day. These shouldn’t be set in stone but they should be designed to give you a framework by which you can more easily make the right trading decisions.