The lyrics for ‘Tell Me Why I Don’t Like Mondays!’ by the Boomtown Rats used to epitomise how I often felt as a Forex Trader trying to take new trades on Mondays. Often I would be seduced into trades by false signals, one way and then the other, leading to extreme frustration. This was the case until I realised that Mondays are days when the markets will most often churn and consolidate and where unsuspecting traders can be preyed upon by the big players and Market Makers seeking liquidity. The market would move in one direction and then reverse and then end up pretty much where it had started. As the week progressed, I noticed that the quality of potential trades improved until Friday, when things tailed off.
Now, I make a point of not entering new trades on a Monday, unless there are exceptional setups with confirmation. I would rather wait until later in the week to enter the markets, in the knowledge that I will most likely have a higher probability of success. After all, trading is all about probabilities because there are so many variables and no-one knows for sure what is going to happen next. So when trading the Hard Right Edge try and think in terms of probabilities.
So where does that leave Mondays in terms of it’s utility to Swing Traders? Well, Sunday’s are my favourite Analysis day, followed by Mondays. On a Sunday the markets are closed and if you can set aside a few quiet hours at most, to systematically undertake your Top Down Analysis on your chosen financial instruments, you may find that pays dividends in the coming trading week. Failing that, then do your analysis on a Monday. If you get to Tuesday and haven’t done it then maybe you need to check yourself and think twice before entering any trades.
If you are a Day Trader/Intra-day Trader or Scalper then you may well find opportunities to trade on a Monday, but just be cognisant of what day of the week it is and that you may be prey to others. Provided you have done your analysis on a Sunday/Monday and have set alerts at levels of interest when the markets open, you could then try and reduce your trading week to Tuesday through Thursday maybe, and go do something else on a Monday and Friday? Remember that this is a Thumb Rule and applies most but not all the time, but even if 80/20 then may be worth considering at least. This doesn't apply to existing Swing Trades that you are already in in this case often the best bet is to sit sight until Tuesday etc. Happy Monday!
Top Swing Trading Tip:
Analyse the markets on a Sunday if you can, then maybe just observe the price action moves on a few Mondays and take a view as to whether you might be in agreement, or not, with my views of trading on Mondays. Also, please do let me know if you find Mondays are your best trading day of the week!