The currency markets are fast moving, and if you take your eyes off the screen for just a few seconds, you could easily miss out on a big move. And if you have a position open, it could be a lot worse – you could make a huge loss, especially if you don’t have a stop loss in place.
Therefore, if you’re day trading, you need to keep an eye on the markets at all time. This means not leaving your desk with a position open, unless you have suitably protective trade orders in place.
One thing that’s important to bear in mind if you do leave your desk is that the market may move while you are away. There isn’t a whole lot you can do about this, and in many cases, the timing of these big moves can be unpredictable. That said, there are times when it will be a lot more likely than others, such as just before and after a major news release or economic event, or when the US market is stirring into life.
The simplest way to combat this is to use a stop loss order to protect your trade, and just hope that it doesn’t get triggered. You could also place a limit order so that if the currency price spikes while you are away you will profit from it – after all, it’s always nice to find an unexpected profit in your trading account when you come back from a break.
Calling in the cavalry
An alternative strategy for avoiding getting caught out by losses while you are away from your desk is to get someone else to watch your trade while you are away, giving them clear instructions as to how to react if the trade goes against your. If you have the resources.
This can be an ideal solution, as a human trader will be able to react more sensibly to events than a robot. That said, if this is not possible, then a robot – or trading algorithm – could be a good solution if you set it up correctly. At the very least, it will prevent you from losing lots of money, and if it is a good enough program, then it might even be better at trading than you are!
But while there are hedge funds that use exclusively algorithmic trading technologies to extract steady and consistent profits, there are some problems with this approach. Even the most successful trading systems can work for months before finally coming in contact with a set of circumstances that cause it to go haywire, and that’s why any trading robot needs to be tested at regular intervals to ensure that it is working as well as it could be.
Tradersdna is a leading digital and social media platform for traders and investors. Tradersdna offers premiere resources for trading and investing education, digital resources for personal finance, market analysis and free trading guides. More about TradersDNA Features: What Does It Take to Become an Aggressive Trader? | Everything You Need to Know About White Label Trading Software | Advantages of Automated Forex Trading