The trading week is very similar to the structure of a football match
One of the most common questions I get from traders is: how many trades can I expect a week? Since we have the FIFA World Cup on right now, I thought I’d explain it in football terms as the trading week to me, is very similar to a football match.
The big question about a football game is when do you expect the winning goal? Statistics tell us that there are more goals scored in the 90th minute than any other. Of course, this includes stoppage time added on, so it’s no surprise. But there’s also structure to the game & this is where the similarity with the trading week comes into play. Let me explain.
At the start of most football matches, the players are usually tentative and nervous. They spend the first 10-15 minutes feeling the other team out by passing the ball around trying to get themselves into a rhythm. Once they settle down and find their rhythm, they start to increase the pressure looking for openings in the other team’s defenses. You get a few random shots from outside the box but nothing too serious.
As they pass the ball from side to side with players making runs down and across the field, they are testing out the opposition’s defense. It’s all about trying to expose their weaknesses, areas that they can exploit to their advantage.
By halftime, the coach and the players have a very good gauge of the opposition and know exactly where to strike them, and that’s where they focus all of their attention in the second half.
The second half starts at a higher tempo as the teams are now working against the clock to get the winning goal/s. The players know exactly where to focus their attention and with clinical precision, the forwards time their run, connecting perfectly with a cross or kick from midfield and smash into the back of the net.
Now that’s a pretty quick summation of what’s happening behind the scenes in a football match, but if you think about it for a minute, it’s not too dissimilar to the trading week.
The Start of the Week
Monday’s are usually approached with caution as the markets need to reconnect after the weekend. Momentum from Friday’s trading usually dissipates, and with the number of geopolitical & international events occurring over the weekends, traders are often reluctant to even trade on Monday for fear of gapping and major slippage. Still, it’s a good time to analyze all the charts and get a feel for what’s going on.
By Tuesday traders are more confident as the major currencies have had time to reconnect and find their rhythm. Any weird events that occurred over the weekend have been fully factored in, and the price action starts to settle down. It’s not a bad time to start focusing on the economic data looking for a potential opportunity to ‘line up’ with the technical picture.
Halfway through the Week
When Wednesday comes around you should be fully in tune. It’s nearly halftime so you should have a very good gauge of what currency pairs are moving and what upcoming economic data to focus on. You can occasionally slip in a few cheeky trades by Wednesday to get some cash in the account as we await the major trading opportunities which more often than not occur in the second half of the week.
Thursday is predominantly the busiest trading day of the week and no surprise that’s when traders are particularly focused. The good thing is by Thursday the charts are usually super clear, and the currencies have much clearer direction. Thursday’s are also usually characterized by having the most impacting economic data releases which allow you to make ‘precision’ plays at the related currency pairs.
The Final Play of the Game
If you haven’t kicked home a winning trade by Thursday, then you still have Friday to trade so don’t get too worked up. I know we’re running out of time before the end of the week, but there’s usually some big US economic data to get stuck into. By Friday’s the rhythm of the major currency pairs is usually very smooth and it’s much easier to pick them off.
So how many trades can you expect a week & when can I expect to get them?
Well, it depends on the opposition and how prepared you are. The better your preparation, the better you will be able to handle the situations that pop up. Some weeks there are loads of opportunities, while others there are none at all.
I know the best trading opportunities come Wednesday onwards each week, but it doesn’t stop me trying to make money earlier in the week if the opportunity presents itself. It’s all about managing your expectations and taking the pressure off yourself to ‘score.’
The goals can come when you least expect it, but generally, they come when you’ve prepared yourself, you wait patiently for the opportune time, and then when you see the opportunity open up, you nail it without hesitation. That’s professional trading in a nutshell.
Professional traders like professional footballers are methodical in their approach. They know when to relax and when to focus and most importantly when they see an opportunity they take it with both hands. If you can get this structure into your trading, I can guarantee you’ll feel less pressure and your trading account will be all the healthier for it.