Often due to low liquidity, summer forex trading can be fickle, whimsical and often times dull. Staring at charts for hours or days when the price action is slow isn’t going to make you a better trader, or make more profits. We need to be using our time to improving our edge whether we are trading or not. So what do you do when the ‘watching the corn grow‘ moments come by?
Here are 2 simple tips you can do to improve your forex trading during the summer months.
#1 Live Simulation Trading
What I Do: Anytime during my normal trading hours in summer when the markets simply aren’t moving, I do live forward simulation trading.
What I do is pick a system on one pair, and for 1-2hrs trade that system as the simulation unfolds in real time. You can work on your weakest/strongest system, or a price action model (i.e trading with the trend) and a skill you want to develop.
Unless you remember the 4hr charts from 12 years ago, it will be just like trading in real time with the hard right edge. The software tracks and saves my performance, which I can then analyze and study.
I trade it exactly according to my system rules and money management just like I do in live trading.
What This Does: Trading the live forward simulation is virtually identical to real trading, and your brain doesn’t really know the difference. What it does is build the neural pathways (automaticity & autotelicity) to learn your system inside and out so when the setups appear in real life, you just pull the trigger.
It also builds confidence in the system and yourself when you see the positive results. In about 1-2hrs, I can do an entire year’s worth of trading which helps to accelerate my learning curve. I try to do about 10yrs per system, then either pick a new system, or a new pair.
During the slow summer hours, this is a great way to improve your trading, confidence, and neurological conditioning for improved performance.
For software that does live forward simulation trading, I use Forex Tester 2 which is easy to setup, great at tracking your performance, and inexpensive ($199). Another option is Trade Interceptor (free)
#2 Shorten My Targets
What I Do: Less liquidity = less directional flow, meaning there will likely be a reversal if there is not enough volatility to carry the trade and direction through.
Daily ranges tend to decrease tremendously during most summer months, thus, I shorten my targets. I also reduce my stop sizes since I will not need ones as large compared to normal liquidity months.
What This Does: Allows me to still hit my typical profit goals for the day, while not sitting around for hours while nothing happens. Remember, you are not paid by the hour – you are paid by how much you make per trade. Sitting around for days on end doing nothing, waiting to grab a simple 2:1 reward to risk play is not worth your time, especially when the same type of setup happens within a day.
So shorten your targets and stops in relation to the decreased volatility. You can check the ATR on your time frame, and try for a target less than its value – usually around 50-80% of the ATR value. So instead of watching the charts for unproductive hours on end, remain active and make money on what opportunities are there.