Knowing when NOT TO TRADE is IMPORTANT.
Look what happened this AM!
40 points in under 60 seconds. Can you afford to be wrong? (*One ES contract would hurt.. 40 Points X $50/Point = $2000 in 60 seconds. *)
What if you were on the wrong side?
OUCH… a SINGLE candle CAN blow up an account, thus setting off a chain of emotional events and horrible trade entries promising “if I can only get back to even”.
Just don’t trade that!
How do you AVOID that?
Know WHEN news is being released.
Read: Pre-Market Checklist Article.
You BETTER know to be FLAT (no position) BEFORE that news release!!!
Times To Avoid Trading
Forexfactory & Financial Juice:
Yellow and Red folder events! FOMC, Non-Farm Payroll, CPI, Fed Chair Speaking, …
MARK these events on your chart. I will draw a VERTICAL LINE at the time and add a NOTE. A big thick RED vertical line.
To be honest, it is probably best to NOT TRADE AT ALL the ENTIRE DAY.
Just take the day off.
Cash is a perfectly FINE position.
No need to trade on days like Non-Farm Payroll (NFP) or FOMC (Federal Reserve Meetings) days.
In fact, some trades will NOT the DAY OF… NOR… the DAY BEFORE these big events. Price hardly even moves the day BEFORE because everyone is waiting on the NUMBER to be released. Is the Fed raising or lowing interest rates? How is inflation? What is the unemployment number?
Even if YOU KNOW, what the number was you have NO CLUE how the market will react.
Just stay out.