Saturday, November 1, 2008

How long to trade forex in a day?

Brokers always trying to find ways how to make profit for themselves and other of course other than waiting for customers to lose their money on trading they also charge rollover fees. Rollover fees is charge when you did not close your trade and carry to another day. Usually this happens because you make losses during that day forcing you to carry another day in the hope to reduce the losses or waiting to profit if you are lucky it goes in your expectation.

However most often that is not the case where losses keep accumulating and at the same time your rollover fees is also increasing as you carry the trade over and over again. If you are not careful enough to handle the situation you might end up losing the entire deposit you have in a matter of weeks if not days.

Therefore in order to avoid losses from the rollover fees you need to manage your trade within a day period. In doing so you need to set a fix time period how long you should leave the open position floating before closing in the end of the day. An idea arise when i used to discussed about the 2 candlestick standard movement before (read candlestick counting and candlestick counting post analysis).

In that post i have discussed about the common movement of candlestick usually move within 2 candles. Therefore if we are using 4 hourly time frame each candle is equal to 4 hours, that means within a day starting from the Asian Session until the US session is approximately 8 hours to 10 hours. So just to make it safer we just stick to 8 hours for all open position before we can close it. After 4 hourly time frame forming 2 candlestick (up = white candles or down= black candle) then we need to close it and enough for that day of trading.

If you are using daily time frame 2 candlestick is equivalent to 2 days therefore whether you profit or not rollover effect will at least make you some losses because you need to carry trade to another day.

This discipline will keep you away from the rollover fees!! Think about it.

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