Saturday, June 28, 2008

Forex Avoiding Rollover Fees

Do you always hang on your open position until the next day of trade and suffer from the rollover fees? I am afraid that most of the novice who is just starting to trade in the longer time frame I.e. 4 hourly or daily might be trapped into this situation very frequently. This can situation can be more frustrating when the carry over trade is in losing position day after day and keep adding up with the rollover fees. As a result in the end you will more money than you are willing to lose during that one week trade.

Therefore today I am going to discuss how you can avoid that carry over trade and willing to accept losses or whatever profits in each day of trade. In order to do that we are going to analyze the low and high volatility of the market and also managing the 24 hours precious period with care. As you can see on the diagram below I have created spreadsheet table containing the data we needed for this. I am going to discuss this using my Malaysian local time which is +8 GMT.

currency market session

The low volatility period ranging from 1 A.M. in the morning until 1 P.M. in the afternoon this is the Asian market session. However please note that the lowest actual volatility period is around 1 A.M. to 5 A.M. in the morning because all market are already closed during that 24 hours period and the Asian market will open around 9 A.M. in the morning where volatility will slightly increase. Then within the range of 2 P.M. and 9 P.M. the European market session will open which indicate the highest volatility in the market. This will follow by the US market session open around 10 P.M. where the market will reduce to moderate volatility.

Dividing the 24 precious hours by 4 hourly time frames we get 6 candlesticks for the whole day trading from the 4 hourly points of view. Out of all these 6 candlesticks maybe 2 or 3 of them will produce the highest volumes indicated by the length of the candlestick body. And this probably occurs mostly during the European market session which is 2 P.M. until 9 P.M.

In conclusion by planning and managing the time limit for the day you can avoid the trade to carry over into the next day and take whatever profit and losses you made during that one day. However if you are willing to bear the cost of the rollover fees because you are in profits then this discussion is irrelevant to your trade.

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