Successful forex traders are known to be highly dedicated to their craft. For them, the trading session does not close when they go home, and the trading week does not end when the weekend begins.
Indeed, most forex traders see trading as a lifestyle rather than a job. They live and breathe the markets 24 hours a day, 7 days a week and that is probably why they chose forex in the first place, since it is the market that stays open the longest.
But they are not always trading of course, as good traders know that it is not wise (nor healthy) to spend every hour of the day holding a position.
Instead, when forex traders are away from the markets they are forever going over positions and trade setups in their head, or looking at chart patterns from the day’s markets on paper. In short, they are using their spare time to test hypotheses in the markets.
However, the important thing to remember when looking at the markets at home, or anywhere else, is not to take a passive approach.
If you utilize a passive approach, you simply look at the charts; you may find some good ideas but you won’t remember any of them. In that instance your time is as good as wasted.
Take notes of your ideas and then go and compare them to the real market to see exactly how your ideas would have played out, bar by bar.
If you see a pattern that you think leads to a good buying opportunity, check the next few bars of the market and see whether your idea would have held up.
Indeed, a good idea is to do this process in reverse; that is, to print off some old charts, where you don’t know what occurs next and try and predict their movements. The more you do it and the more hypotheses you test, the better you will get at predicting the market’s turns.
Indeed, most forex traders see trading as a lifestyle rather than a job. They live and breathe the markets 24 hours a day, 7 days a week and that is probably why they chose forex in the first place, since it is the market that stays open the longest.
But they are not always trading of course, as good traders know that it is not wise (nor healthy) to spend every hour of the day holding a position.
Instead, when forex traders are away from the markets they are forever going over positions and trade setups in their head, or looking at chart patterns from the day’s markets on paper. In short, they are using their spare time to test hypotheses in the markets.
In the bath
Testing hypotheses in the forex markets can be done at any time, even in the bathtub. It is not uncommon for some traders to take charts with them wherever they go, so that they can look for patterns and work out trading ideas without the constant distraction of open markets and flashing quote screens.However, the important thing to remember when looking at the markets at home, or anywhere else, is not to take a passive approach.
If you utilize a passive approach, you simply look at the charts; you may find some good ideas but you won’t remember any of them. In that instance your time is as good as wasted.
Be scientific
Instead of looking at the markets passively, it’s important to be scientific. Any idea or hypothesis that you come up with at home needs to be tested so that the work you are doing is not a waste of your time.Take notes of your ideas and then go and compare them to the real market to see exactly how your ideas would have played out, bar by bar.
If you see a pattern that you think leads to a good buying opportunity, check the next few bars of the market and see whether your idea would have held up.
Indeed, a good idea is to do this process in reverse; that is, to print off some old charts, where you don’t know what occurs next and try and predict their movements. The more you do it and the more hypotheses you test, the better you will get at predicting the market’s turns.
Editors’ Picks
EUR/USD hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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