Top Times You Should Stay Out of the Market – Introduction
To professional traders, trading is interesting and addictive. To them, trading is the most interesting thing. I know people who always wonder why the financial markets are usually closed during the weekends. To cope, they have now embarked on trading cryptocurrencies because their markets are usually open during the weekend. But amidst all these, it is always important to stay out of the market at certain times especially when you are an inexperienced trader. In this article, I explain times that you should do this.
- Emotionally Disturbed
Life happens and we all go through its motions. Today we might have a good day and tomorrow the worst might happen. A friend or family member could die. A road accident. Your market picks could underperform. A company you shorted could be acquired. A close friend or family could fall ill.
This is life. And it happens to everyone.
Consider the events of this weekend. A prominent Saudi Arabian prince and one of the richest men on earth was arrested. At the same day, another prince was involved in an aircraft accident where he died.
So, when life is not going on well, remember that you are not alone. Such things happen to everyone.
When such things happen, I highly recommend that you don’t trade. Trading at such a period will be disastrous to you because your emotions will not be able to process what is happening in the market.
- When your analysis is not adding up
Several times, your analysis will not add up. If you are a technical trader who uses several parameters, often, these parameters will not add up. For example, if you only enter a buy trade when the asset is oversold using both the RSI and Stochastics, and when the price is below its moving average, then you should always stay out of the market if these conditions are not met. This is important because many people are constantly under pressure to initiate trades that are not justified by their thesis. Always stay out of the market during such times.
- Before the data
Earning season and economic data release is one of the most profitable periods. This is because the market tends to make huge moves after the data is released. Unless you are a very experienced trader, I recommend that you stay out of the market during such a time. Experienced traders know how to trade and allocate money on their trades during this time. But, if you are inexperienced, chances are that you will lose a lot of money if you trade before the data is released.
You can however learn how to trade during this time by learning the concepts of options, buy and sell limits, and buy and sell stops.
- In your time off
I have advised traders in this platform to regularly take their time off. They can do this during the weekend or during the days they plan to do so. It could even be a Monday. During this time, I recommend that you stay out of the market. This is because your mind is probably somewhere else. You could be spending time with your family. Or having fun with friends. Just stay out of the market until the time you have set.
- After a Big Loss
In the past, I have advised traders to minimize their losses by having a risk-calculated stop loss. The stop loss gives you a chance to limit the amount of loss you can make per trade. But, some trades you initiate might go the wrong way which can be hurting. When this happens, you might be tempted to initiate a trade in the opposite side. This is known as impulse trading and its results are often tragic. When you make a big loss, I recommend that you stay out of the market for a while before you start trading again.
Staying out of the market helps you in many ways. It will help you avoid impulse buying and making costly mistakes. It will also help you be relaxed so that you can make the right decisions.
Top Times You Should Stay Out of the Market – Useful Tips:
- Find out more on BabyPips;
- For further information, please, go to MarketWatch;
- Another interesting reading on the matter on MightyRecruiter.