Sleepless nights are very common when it comes to forex trading because of its unique property of being open 24×7. And this is what brokers promote their offers with such as low brokerage from 12 am to 6 am.
This third devil of sleepless nights mostly grabs the day traders who attend their regular 9 to 5 jobs and in the spare time in front of their laptop or tablets or mobile phones to trade. And that extra time for them is usually at night.
A forex trader will do some research and see that the market of some other country is trading at night. He thinks that this is the right time to make profits and cover the bills.
Dear Forex trader, this is not at all the right time for you as you are bound to take wrong decisions. How? Let me explain…..
Let us start with an example of a casino. If you are a casino person, you must have heard a gambling axiom “the odds always favor the house.” This simply means that in every gambling game the game is always in favor of the casino. Suppose ten people are putting $100 each on a wheel game and if the desired number pops on the wheel, the winner will get eight times which means the winner will get $800. But initially, those ten people gave $1000 to the casino which ultimately means after paying off the winner amount the casino is still keeping $200 in its bag.
On top of this, the casino multiplies its advantage by creating an environment in which your brain’s serotonin level is always on a high, and you always feel overconfident. This is mainly done by removing all the time showing machines and by pumping fresh oxygen again and again. And the icing on the case is sound and lights that push a type of hormones in the body that you don’t feel drowsy at all. All this increases the money flow to the pockets of the casino owner.
Similarly, in the forex world, the brokers lure you by showing you again and again that you can trade at any time of the day and they know the time at which most of the traders are free to trade is the night. But if the brokers can take their brokerage at any time of the day, why do they encourage to trade particularly in the night?
To understand this, let us take an example. Suppose, there are 1000 customers of a broker trading in the currency pair EUR/USD. Of these 1000 customers, he will suggest 7000 to buy a currency pair and the remaining 3000 to sell it. Along with this, he also buys the same currency pair as the majority is on the buy side. This leads to a price increase. Now, 7000 people have made money in this transaction, but 3000 have lost the bet. And at the same time, the broker also made money by two ways. Firstly, he brought the currency pair, so he made profits when the price increased. Secondly, he took brokerage from all the 1000 customers!!! This means whether you lose or win, the broker is always a winner.
Now, trading at night or early in the morning leads to poor decisions as you are sleep deprived and that is why your serotonin level is low which ultimately leads to slowness and confusion and finally wrong decisions.
So what is the solution? What is the best time to trade?
Before considering the answer to this question, you must first understand the type of strategy you are putting in and if you are confident about your strategy or not. Once you have finalized it, it is the time to find out the free time for trading in the day time. Just ignore all the night offers provided by your broker. He is just trying to lure you as he can make more money at night.
So analyze your schedule, take out the correct time when you can fully concentrate and trade. But if you cannot keep aside your trading time in the day time, it is the best to opt for long term investment rather than trading at the night time and losing the hard earned after tax dollars.
Now, when I selected the time to trade in the day time, I was met by the fourth Devil i.e. Over-Trading. See, how trading in the forex world can push you again and again into the hands of deadly devils. But to be a successful trader or investor you have to keep your sword sharp to kill the demons. So, let’s confront our next devil and the way to handle him.