I speak to many traders every single day and i have been exposed to many many people. I have been blessed with the opportunity to help many aspiring traders and also exposed to many veteran traders who help me in my trading as well. However, the beauty of trading is that it is very personal and more often than not, you will discover something from anyone with years of experience trading in the market that you could use. Of course, do your own due-diligence to see if it works(most importantly!) and if it suits your style. Otherwise, just slot it amongst your reference material collection library(respect intended).
One of the most common observation i have made off many traders, especially aspiring traders, is that they are really into technical trading. I mean, they analyze charts with a multitude of indicators and have all kinds of systems, layouts and monitoring working for them. Some even have the same systems and complexities multiplied on multiple time frames, making them feel that they are in "control" and can nail the next move that happens.
Honestly, this is suicide. Trading must be simple and personal. I won't go into a lecture on why indicators, what indicators and so on. Maybe we can have that for another discussion.
My point is, traders are absorbed into the world of technical trading that they think and believe is the ultimate observation perspective. There are many other events that happen on the fundamental front that cannot be translated onto technical/empirical data for you to observe and trade on.
Let me give you an example.
From Wed till today, we have various options expiring. This causes undercurrents in the FX trading scene as there will be large hordes of contracts which expire and change hands in the equity, cash, index based markets.
This will cause volatility. Simple as that. We cannot deny this nor can we avoid it if you would like to trade consistently.
So what happens? You will have lots of noise on your charts. Your trend trading systems will suffer. If you already have trend based positions open, hedge them or tolerate its drawdowns. Pick up a couple of scalping strategies based on short term movements and work with them meanwhile.
If you have short term scalping EAs to work with, this will be a good time to let them run ragged with the volatility in hand.
Honestly, not many people know this and i was chatting with another trader online that confirmed this. His excuse was that it only affects the options market, why do i have to be concerned since it is the currency market i am trading? ___________ Fill in the blanks please.
Always keep an open perspective and know the bearings of the currency market as it is one of the most sensitive.
And if you want to know these important dates as to when options expire and other settlement/clearance dates, refer to this document.
Zen Trading,
Seeni
