- PPF Points
- 7,069
One could think that trading forex on Mondays was a great way to begin the week, but determined forex traders do avoid it for a good number of reasons. The market which had been dormant over the weekend suddenly gets livelier but still, the liquidity remains low and the momentum is not there during the early Monday hours i.e. before the major financial centers have fully opened. Consequently, price is going to chop unpredictably and such volatile price movements are very difficult to read and trade with confidence. With reduced volume in the market, price action is going to lose its sense of direction and this makes it even easier for false breakouts or whipsaws to occur, and trick you into taking your stop-loss before the real move happens later in the week. Besides, the market usually has to process all the weekend news and events going on and that, coupled with the fact that there are few active players among the traders, can cause some quite irrational or misleading reactions at the start of the week. Entering the arena too quickly might mean that you will jump on the wrong side of the trend and stay there until the situation changes when the real volume comes up from London or New York. Like other professionals, traders take this particular day of the week to rethink and consider the options of new trading opportunities as it is the day of new data creation and new trends or possibilities. However, the day's decisions are often based on emotions—traders eagerly trying to recuperate the last week's losses may chase after and even force the trades instead of waiting for those high-probability setups. In most cases, when traders take Monday to observe, analyze and plan the market instead of trading, this tactic can give them more benefits and lead to a better chance of being saved from the market's indecision at the beginning of the week, thus availing a trading edge, and as a result, profit.