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Book: The Part-Time Currency Trader

Readers who have been following this blog long enough might remember that I began trading weekly as opposed to trading intra-day or daily charts. I still trade weekly charts. It suits me and I am sure it would suit a lot of people as well.

Personally, I look at trading as a long-term proposition rather than a get-rich-quick scheme. By long-term trading I refer to trading longer time-frames and trading smaller trade sizes. By treating trading as a 'get-rich-quick scheme', I refer to trading short-term and using high leverage rates.

If you have a business to manage or a full-time job to focus on during the week, you really would rather want to avoid your trading interfering with your week. You would want to avoid having to look at the market every hour, three hours or every day. You would rather not have to be analysing and re-analysing your trades, opening, closing or adjusting your trades while you do whatever it is you do Monday to Friday.

The need for a longer trading time-frame arose for me after my trading kept getting interrupted when I needed to travel. If you are a systematic trader like me who trades on the basis of probabilities using a data set of hundreds and thousands of trades not just one trade, it is important to execute all trade signals and open and close your trades during specific times. Further, to devise your strategies, you need to test them using and relying on, the most stable variables you can find. In Forex, the opening and closing of weekly exchange rates are stable price-points available as reference points when you are developing, testing, trading and evaluating your strategies .

During the weekend, the foreign exchange market pauses all over the world. Being able to trade on the weekend allows you the flexibility and freedom to devise more complex trading methods and make carefully planned and thought-out trades while the market rests and everything else is relatively calm and quiet. It also allows you to trade multiple currency pairs and have ample time to evaluate each trade should you wish to do so. Being able to trade during the weekend avoids rushed decisions and situations where you are trying to get in or out of the market at specific price points (eg: the opening or closing of the next time frame).

Fortunately for me, I found a market maker years ago who allowed weekend trading. They are probably the only market makers who allowed traders to open and close trades during the weekend. Unfortunately however, they have recently decided to put a stop to weekend trading. They stopped because to continue offering weekend trading, they had to maintain spreads higher than what they can during the week and they felt that their commitment to having the lowest spreads is being compromised.

As a consumer however, I am happy to incur higher trading costs for the benefit I get of being able to trade on the weekends. Further, the way I see it, they are still offering the lowest spreads around because no one else is offering! If a business is doing its best to reduce its prices for its customers, that's all I can really ask for.

What this event tells me however is that not a lot of people are trading weeklies... at least not profitable enough for my market maker to continue offering it. The reason for this post therefore is to inform others about the benefits of trading weeklies. Since most forex brokers do not offer weekend trading, I am guessing not a lot of everyday traders have considered it. I can see what motivates forex brokers and market makers to discourage longer term trading and encourage short term trading to maximise the number revenue by increasing the frequency of trades their traders make. They can profit more from a trader who is trading 5 times a day, than from a trader trading only once a week. They should also consider however that a trader who trades once a week might then decide to trade more currency pairs.

From personal experience, shorter term trading increases your transaction costs, therefore increases the required rate of return you need to be profitable, usually to the point of impossibility. Shorter term trader increases the emotional interference and disturbance a trader experiences when trading and leaves less room for error. With longer term trading and small trading sizes, more traders can continue trading and ensure a more sustainable relationship in which they continue supplying their brokers and market-makers with transaction revenues for the years to come. As small traders, we must ask why the big institutions trade longer time frames? Why do they do it? Is there something in there that we as small traders can benefit from?

Feel free to let me know of your thoughts on trading weeklies. Have you considered it?

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