Forex Strategies and Tips

Overcoming The Monday Jitters

Are Mondays bad to trade?

Or are you hit with the weekend FEAR FACTOR?

We love to trade. When you finally figure out how to do it... there is an exhilaration to this career that can't be beat. Yes, we're happy for that weekend off ... forced downtime is always good. But we're actually happier when the market opens after the weekend...

and yet...

We also feel a certain trepidation and fear going into our first day back. Do you?

The fear of losing always accompanies trading. After a few days of trading we're usually strong in our psychology again and we overcome that worried feeling, or at least keep it in its place. But that first trade back after time-off always makes us more nervous.

In this article we have some more theories about this we'd like to share, and some suggestions for conquering the weekend slump.

Good trading to you all, Evelyn & Mindy
Developers: Forex Smart Tools

Are Mondays Bad To Trade Forex ?

Mondays get a bad rap in Forex. A lot of people just take the day off. But is it really the market that is slow? Or is it this weekend build-up of fear, or the downtime when we lose our sharp edge that's to blame?

Granted, some times there is not enough news on a Monday to move the market much, but let's take a look at some statistics.

We used to be fanatically about keeping our own stats at Forex Smart Tools, because we always want to prove... or disprove... common notions (Question Everything!). So we would look closely at the ADR (Average Daily Range).

Let's look at the ADR per day of week for the EURJPY for several years as an example.

What do you see?

In 2009, Monday is the second strongest day of the week, following Thursday.

In 2010, all the days of the week vary by only about 40 pips. 

In 2011, Monday is the second strongest day of the week, following Thursday.

In 2012, Monday is the third strongest day of the week, better than Tuesdays or Wednesdays.

In 2013, Monday is the third strongest day of the week, on a par with Thursdays and Fridays.

And the five year average? Well Mondays are certainly better than Wednesdays and only a few pips off Thursdays and Fridays.

(We could go on and show you more current years, but for us the case was made, so we put our data collection efforts into other areas).  The markets tend to repeat themselves, so 5 years was enough for us.

So maybe it's not the day of the week at fault - maybe it's you...

How Do I Keep My Game On?

If you look at professional sports, watch how much time they spend warming up before the game starts. An athlete will never hit the field cold. Yes, part of that warm-up time is to get the muscles loosened up so they are less susceptible to injury, but an equal part to that routine is getting the mind in gear for what's about to come.

We watch a lot of American football and notice that the quarterback will often try to get the ball to his best receiver as early in the game as he can, so the receiver can begin to 'get a feel for the game' right away. This is far beyond 'warm up' - it's in the spirit of shaking off the fear factor.

That's just what we're talking about in trading too. You have to shake that fear off as quickly as you can before you put your money on the line.

One of the best ways we've found is to hop on the Forex Tester for awhile on Sunday afternoon. It's an hour we always find well-spent. Even 20-30 minutes makes a difference to our confidence before we begin our trading week.

When we spend this time, we're not so much testing our strategy or testing the market... we're refreshing our reactions and our mental state. One of our best trading buddies David puts it this way:

“I struggled with my trading, entries, exits, patience etc. The way I really conquered it was I use a trade simulator now. I pick my times to trade live, and spend the rest of the time on my trade simulator. I can forward-test trade a whole 24 session hour in about 60 - 90 minutes.

I trade the simulator, looking for trades. When I see one, I stop the simulator, evaluate the trade, the stop loss I need to use, the lot size I will place based on the Advanced Calculator, the exit I will look for – and then I restart the simulator.

By doing this over and over again in fast speed, I more easily see the set ups that fail in live trading and the ones that win as well.

I have taken my live trade this morning...and now I am on my simulator until Frankfurt open...so it is like I am a finely tuned athlete when my time for live trading comes up.”

~ David G.

Another Tip: Lower Your Risk Profile

If you still feel the weekend slump, one other suggestion is to lower your risk profile until you feel your confidence returns.

For example, instead of risking 2% per trade, you might choose to risk just 1% on your first trade back each week.

The position sizes for the correct number of lots to use for your reduced-risk trades are easy to see using the Advanced Calculator - just reset your risk profile on the Setup tab for that day.  Move it back up when you feel you've shaken off the jitters.

Track Your Own Daily Results

One other factor to consider is your trading strategy.  Some might work well on certain days but not others.  Really - we've tracked this and seen it many times.

How do you know about your strategy?  Maybe you'd avoid many losses by sitting out a day of the week and increasing your trading on another day that proves to be great.

This is where the Trade Log comes in.  You can quickly set up a custom parameter with the days of the week life this:

And then as you enter each trade you can associate it with the day you took it; pick from a dropdown menu.

Pretty soon you'll have a great pile of data from which you can make smart decisions tailored to your own trading - not what someone else tells you about your trading, but what you can see for yourself.

You can then go to the Summary tab of the Trade Log and find a table breaking out each day: