Fridays are rarely the free days that the name suggests. Today, I was in a position to finish trading early. This is something that I had said I would try to do on a regular basis, but markets don’t seem to understand my desire. The week has had a lot of turmoil and volatility as financial markets dealt with yet another series of events in one country that would have major international impact. The terrible earthquake in Japan last week and the subsequent explosions at nuclear plants have been the beginning of a national disaster few of us can even begin to comprehend.
Foreign exchange markets, while full of people expressing sympathy for every Japanese person, were captivated by what would happen to the Yen, the Japanese currency. Suffice to say for the moment that it has been on a roller coaster ride this week, including breaking to all time high levels against the US dollar in a sort of ‘flash crash’ on Wednesday evening, after markets closed in New York with the US dollar-Yen under the critical level of 80. This seemed to have triggered massive panic selling. Since then, the Japanese authorities first alone, and then with the coordinated assistance of G7 countries, intervened to reduce the level of the Yen. I wont go into the rationale for all of that. But, it has made for some nervous conditions in foreign exchange markets, and the concerns about the wild swings had some watching the markets constantly rather than letting any major movements go unseen.
While staying up to watch the movements has some merits, so too does doing what you normally do and go to bed, if it’s your night-time. What will be will be. If you were worried about a position that was open during the time you should be asleep then it should have been closed to remove that worry, or stop losses put in place at levels that would not do more than minimal damage.
I admit that I stayed up later than I usually do, and spent part of last night interacting with a friend in Barbados over Skype, as much fascinated by what the G7 would agree and what reaction there would be. Naturally, I am now very tired, moreso than usual as I also was experimenting this week with seeing if I could start trading for a couple of hours after London opens at 2am EST/3am DST, rather than after New York opens (7am EST/DST). But, it’s Friday, and I will take my usual time over the weekend to get the markets out of my system. Today, it was good to get that process started early. It was a balmy Spring day, with temperatures in the 70s, and I took a mid-morning walk with my wife, who had taken the day off.
But, the events this week have helped put a focus on some of the things that traders worry about, and many of them, like the price movements themselves, are totally beyond a trader’s control. You determine a few things: the prices at which you enter or want to exit a trade and the loss you are prepared to take. The market will determine if you make the gains you expected at the outset or if you will make or less. Traders also spend a lot of time trying to understand the directions of prices and some use very complicated analyses. I’ve come to realise in the past few weeks that much of what you need to know about trends can be seen very simply. Some patterns are blindly obvious, though not everyone will see them. What many of us do wrong is to place a higher certainty on future developments being in a particular direction rather than assessing the probabilities of that or something else occurring. We also do not always thing about the totally unexpected occurring. But, when the unexpected occurs, we need to adjust to the new normal. You cannot do anything else. You have to trade what you see, not what you feel. If you see nothing you want to trade then shut down your platform and go for a walk or listen to your music or something else. Another day will bring other opportunities. I will try to remember going forward that Friday is meant to be a free day, at least in spirit. Part of being better at trading is to get the mind right, and thinking that Fridays will be free is not a bad thing to have at the back of the mind.
Time to leave the rippling sound of the pond and to go and have a family dinner.