In the past, we have shown you the best time to trade, but not one article on the internet talks about when you should stop trading.
So when is the best time to stop trading?
Before we continue though, let’s do a refresher. When is the best time to start trading?
For currencies, it is when the Forex sessions are open.
Another factor that informs the best time to trade is your trading plan.
You must be fresh and in their best mood to trade very well.
The market conditions must also be favorable in order to start and continue trading.
The best time to stop trading is the exact opposite of the best time to start trading.
You should consider stopping trading when:
Forex Sessions Close.
If you are trading currencies, you must already know that there are Forex Sessions that turn markets on and off.
Each Forex Session comprises a pool of currency pairs tied to the economies related to such a Forex Session.
When each Forex Session is open, the currency pairs related to the session post-high volatility.
High volatility presents so many profitable set ups and many traders prefer it, including major trading powerhouses like banks.
You should therefore consider trading when the sessions are open.
When such Forex Sessions close, volatility lowers and the markets begin ranging.
Here, profitable opportunities are rare.
The majority of traders do not prefer trading at this time.
Neither should you prefer trading at this time because losing money is easier than when the session was open.
Here are the major Forex Sessions and when they close.
- Sydney – Close 06:00 to 21:00 GMT.
- Tokyo – Close 08:00 to 23:00 GMT.
- London – Close 16:00 to 07:00 GMT.
- New York – Close 21:00 to 12:00 GMT.
Your Time to Trade Expires.
In trading, you must have a trading plan and adhere to it.
Your trading plan must specify which time you start trading and which time you stop, among other conditions.
On average, you may consider trading say two to three hours a day.
If your plan is to trade two hours and you begin at 08:00 GMT, you must stop trading at 10:00 GMT.
This is because you understand why you chose that time interval and why trading after that time is not suitable for you.
Do not break your own rules because you may end up losing your capital if you go beyond the time you set.
Maybe you realized that market conditions are never favorable for your strategy past that time which you have planned to be stopping your trading.
Does your trading plan require you to stop trading at 12:00 GMT?
Then stop trading. It is such simple disciplines that keep you afloat even on bad days.
You hit your Profit Targets.
Did you just hit your daily trading target in terms of profits?
Then leave the markets.
That is applicable to scalpers and day traders. Swing traders and position traders should also exit the markets when they hit their periodical targets.
But what is wrong with trading a little longer to bag some extra bucks after hitting my target?
Nothing is wrong with it, but greed and the urge to continue trading may overcome you.
You might actually be caught up in a losing trade and your emotions set in to gas you up to recover such losses and that may work against you.
This is because you don’t want to leave the market a loser yet you had already hit your target, and the decisions you make thereafter may be irrational and result in further losses.
Do I reiterate?
Once you hit your profit target, whether daily, weekly, and monthly or so, depending on the kind of trader you are, stop trading.
You are Too Tired to Concentrate.
Have you been in front of the screen for too long?
Rather, have you been held up with other stuff apart from trading?
Then chances are that you are too tired to concentrate.
Depending on the strategy you use, you may require adherence to very strict rules and conditions to win.
If you are tired, you may be incapable of paying attention to detail and that will be the cause of your undoing.
So what is the best thing to do?
If you realize that you are too tired to concentrate and pay attention to the details of your trading strategy, just stop trading.
If you don’t, you may make such serious and gross errors in your trading and this might cost your trading account big time.
You Encounter a Streak of Losers.
Does the term ‘a losing streak’ define your situation at any given time while trading?
Well, if so, then it is not time to take revenge from the markets. It is time to call it quit.
Have you lost a consecutively large number of trades?
Then may be your strategy is failing.
It is time to take a break and evaluate your strategy.
You may actually not go into evaluating the strategy right then, just take a break from trading.
You might even be too tired to pay attention and this can be seen clearly in your uninterrupted losses.
It may not be a proper time to trade according to your trading plan.
The Forex Session related to the currency pair you are trading may have closed.
Whatever the reason, if you notice a pattern of losses, just quit trading and take a break.
You can figure it out later.
Trading is a business and businesses yield either profits or losses.
You will have enough time to re-strategize and win more trades, recovering your losses.