How Long Should You Leave Trades Open?
In this video:
00:22 – Last video and podcast for 2016
00:35 – Trader asks about leaving trades open overnight
01:45 – Other markets often have opening gaps
02:45 – News announcements don’t often create gaps in the FX market
03:55 – Daily trades have made clients +35% account gain this year with low risk
04:40 – Client makes +27% gain since June with a 3% drawdown
05:30 – Spend some time to review your trades
06:05 – I start trading again on Monday 9th January 2017
06:40 – Thanks for watching and listening to my weekly videos
How long should you leave your trades open in the market? Let's talk about that and more right now.
Hello Forex traders, it's Andrew Mitchem here, The Forex Trading Coach. Today this is video and podcast #208.
Last video and podcast for 2016
It's the last video on podcast for the year of 2016. What an amazingly quick year it has been, but more about that shortly.
Trader asks about leaving trades open overnight
The subject of today, and it comes about as a result of an email I had from a follower of mine on Forex Peace Army, a guy called Ray. Ray said, “Andrew, I love your podcast. Can you do one about the possibility of an overnight gap jumping right past your stop-loss? What's the possibility of a flash crash while you are sleeping? How do you deal with that? Is Forex more immune to this than other markets?”
Ray goes on to say that he used to trade futures where gaps were always a possibility. How do I trade the longer time frame charts? The great news is Ray is that the Forex market doesn't really have gaps, being a 24 hour market from its open to it's close; you don't really get gaps. You can occasionally get a gap from the market closing at the end of the week until the beginning of the next week, and that can sometimes happen. It generally doesn't become an issue for most people the way that they trade. If you're trading a longer time frame charts then the gaps generally, if you leave your trades open over the weekend, don't become too big of an issue. If you're trading shorter time frame charts, so for me anything from a daily chart and lower, I always close them at the end of the week or before the end of the week anyway. If we get a gap open at the beginning of the next week, it's not really a big deal.
Other markets often have opening gaps
What you're referring to, Ray, being a futures trader or a previous futures trader, is that you get gaps of say between the market opening and the marketing closing on most of those other markets you look at commodities et cetera. Most Forex brokers now offer far more options available to us, different markets, than just the currency markets like they used to. You can trade things like coffee and soy and different markets as well on most Forex brokers. When you look at those, they are largely dependent around the market times that they open and close and they're certainly not 24 hour markets, most of them. Most of them are dependent on the US. If you're not in the US then they become really difficult markets to trade.
For me over here in New Zealand, most of those US markets open somewhere between two and four o'clock in the morning, and I certainly don't want to be up looking at charts at that time of the day, but you do get gaps on those markets.
News announcements don’t often create gaps in the FX market
Even in the Forex market when you get news announcements and the announcement's massively better or worse than expected and you get some decent price action, very rarely do you actually get gaps in the market.
Ray, to answer your question, to leave your trades … when you say overnight, it depends again where you live in the world. If you're talking between the close of the day which is 4:59PM New York time and leaving it open through to the next 5PM New York time and into the next day on the Forex charts, then most times it's not generally an issue. That's one of the great things. If you are still concerned about it, then of course you can go and you can day trade, scalp trade, and that's absolutely fine; that works extremely well. It just depends on what suits you. If you're the sort of person that wants to be in and out of a trade all the time within a few minutes or a few hours, then I suggest you go down to shorter time frame charts.
Honestly, I've been trading Forex for 13 years, and I've never really had apart from maybe one or two occasions where you see an unexpected gap. Very, very rare do you get that.
Daily trades have made clients +35% account gain this year with low risk
As I mentioned in the beginning, we're at the end of 2016. It's been a fantastic year. I've helped heaps of traders around the world; had a really good year myself. My daily trade suggestions that I post to my members on the membership site, if you did nothing else and just followed those for this year, only half of 1% risk for each trade, you'd be up over 35% on your account. That's without even compounding. Now you add on top of that the trades that I post on weekly and monthly charts, trades that I take on my live webinars, trades that I post and other clients post on my forum site, plus of course trades that people take themselves, you can see what an exceptional year we've had.
Client makes +27% gain since June with a 3% drawdown
In fact, I've just received another email this morning from a client called Paul who joined me in June, and Paul said that he's had a 27% return on his live account since June, with only a 3% draw down. So it's exceptional trading, and that's just taking a few of my trades plus his own trades. A 27% account gain, and he's only joined me in June. I don't know when Paul started trading, it may have been right at the beginning or he may have taken a few weeks first, but either way that's an exceptional return with only a 3% draw down.
It's all well and good saying, “I've made a 200% return,” and that's great, but not much good if you've had a 50% draw down at the same time. Statistics are really important to actually analyse them further than just look at the performance result and go, wow, that's either really good or really bad.
Spend some time to review your trades
You have to look further into it and see what draw downs were, what risk per trades were, and all those sort of things to give yourself a bigger perspective picture on that.
The thing you can do, at the end of the year, go and review your trades. Go and have a really good look through the trades that you took, the ones that were profitable, the ones that were not, and try and analyse why the good ones were good. Why did they work? Why did the losing trades lose? Is there anything you could have done differently? Have a look through that and analyse the markets. Go back through your charts; analyse your account history. Really take some time over the next few weeks while the markets are pretty quiet … time really.
I start trading again on Monday 9th January 2017
I‘m stopping trading today, being the 16th of December. I'm not even looking at charts or starting until Monday the 9th of January.
If you do follow my posts … The freely available posts on my website, or Forex Peace Army, or Twitter or Etoro, wherever you see them, they won't be starting again until Monday the 9th of January. There's just no point in trading when the market's that sort of potentially either very volatile or very quiet. We don't know of course in advance which it's going to be, but I prefer to have a decent break and then start again when the majority of the market is all back in action, 9th of January onwards.
Thanks for watching and listening to my weekly videos
That's it for me this year. Thank you for watching my videos, thank you for listening to my podcasts. I hope you've really enjoyed them. I hope you've learnt a lot. The people who have joined my Christmas sale this year, the fantastic feedback already from people who have joined this week. If you've missed that, well there's been plenty of opportunity to jump on and you'll have to wait until next Christmas. There's been plenty of opportunity for people to join.
If you need any trading help, just send me an email [email protected] Replies may take a little bit longer over the next few weeks, because I also want to enjoy Christmas and do plenty of flying and family things and barbecues and beaches; don't forget it's Summer this side of the world at Christmas time.
That's it for me. Have a great Christmas, great New Year, and a happy, safe, prosperous 2017. I'll see you in January, bye for now.