Part-time Trading - Part 4

I promised you I will write about the price action in this post. But before going there, let us talk about something else.


What we do in the weekends when there is no trading? 
In the weekend we prepare ourselves for the coming week by doing some research on all the pairs that we are going to trade. This may take around half an hour to one hour if you choose to trade 28 pair (the best for trading). This is the best time to do your research as the markets are close, there is time for you to go through each currency pair personally. You can choose any day of the weekends (Saturday or Sunday) and any time. In this time you are going to check the currency pairs on different time frames (M, W, D) and most important thing is, you will be getting ready for the coming week. This is important because, this will minimise the time you are going to spend on the week days for trading.


Currency Pairs:
There are different currency pairs to trade. But you must choice the ones which suits you in different ways. The main currencies which are most heavily traded are - USD, EUR, GBP, JPY, CAD, AUD, NZD & CHF. So you are going to concentrate on theses heavily traded currencies in pairs (EUR/USD, GBP/USD, USD/CAD, USD/JPY, AUD/USD, NZD/USD, USD/CHF, EUR/GBP, EUR/JPY, GBP/JPY etc. You can get 28 pairs.) But for some of you, you will not get all the pairs you want to trade. So you can select the ones with  lower spread (The spread is the amount of pips between the bidding price and the asking price is called the spread. The spread is what forex brokers use to make money on every forex trade placed through their network. For example, the forex broker may be paying a price of 1.3600 for buying or selling. The broker will then allow you to buy the currency for 1.3601 or sell it for 1.3599. The spread always stays around the actual price that the forex broker is paying. So when you buy, you get one end of the spread and when you sell you get the other end of it, and vice versa. By the time you close your trade, you will have always paid the spread.), more conservative pairs.


What we actually do on the weekends is go through the charts of each currency pair we want to trade (usually 28 pairs). First we remove all the lines we drew before. We start with EUR/USD monthly chart.

In the above picture what we see is EUR/USD on monthly time frame. What we see there?

What we see in the above picture is there are few support and resistance lines. I know there is one more in the extreme bottom - I didn't mark it because it is very far at the moment from the current price and I don't want to make my chart too crowded. You can see that the price is nowhere near the S/R. So let us move to weekly chart for the same pair.



In the above picture, you can see a beautiful Trend-line, Few Support and Resistance. Can can see a trade forming around 1.334 with the trend line. But there is also a resistance which was broken up-side before. As you already know, Horizontal line give better quality signal than trend-lines, Let us watch and see the price pattern (I will write regarding price action in my next post) and accordingly we will place the trade. Now let us go to daily chart.

In the above chart what we see is EUR/USD on daily chart we have our trend line, S/R also. But look closely. the price is not very near any of them. So what we do is, wait for the right opportunity either the price has to move up near the resistance/trendline or near the support  so that we get a valid trade set-up.


So the same thing we do with all the other currency pairs we want to trade. We start from monthly time frame, weekly then daily and draw out lines. Some times, we may not have any trades at all. 


Important thing is we maintain a trading dairy. We must note down what we observed on our weekend research. We must note down if we are waiting for any future trades on particular currency pair. This will be helpful for us in the week days and save us a lot of time. (For example: in the above research on EUR/USD, we observed that, there are no trades on monthly time frame. But on weekly there is an opportunity. On daily time frame, well not right now. But there is more movement in daily. So we may get in future as the price is not very far from support/resistance.).

I hope this was helpful.