Whether you are in the United States or trade the U.S. markets, you should know that Monday, May 31st is Memorial Day. Some markets will be closed, while others, including currencies, will slow down tremendously during the New York session. This weekend also marks the unofficial beginning of summer, as the seasonal vacation travel begins in many parts of the world and financial markets begin to slow down a bit. Now is the time to prepare for summer trading.
As a trader, I have always found Memorial Day Weekend to be a critical time marker. Usually, whatever “sell in May and go away” fears that were in the market have started to settle, and it creates an ideal opportunity to assess and plan for the summer months of trading.
This article will briefly examine critical areas for review and preparation as you plan your summer trading.
Time Off Is Good For You
First, I always remind myself and others to take the appropriate time away from the markets. Sure, different personalities prefer different kinds of relaxation and vacation. Whatever way you choose to spend your free time, make sure to put aside some time for yourself. Summer markets are generally slower and provide an excellent time for some self-care. Furthermore, without such care, any of us are at the risk of burnout.
Also, time away from trading can reveal plenty to us about ourselves. For some, being away from trading can be a reminder of how enjoyable the process is. At the same time, others realize that they prefer not to return to their screens, realizing that their trading life isn’t as appealing as they once envisioned.
This point of the year is also a great time for reflection. Five months into the year gives a good indication of the potential for success for the entire year, as well as the possible disappointments.
Give Your Trading An Honest Assessment
When we assess our success, we must do so with objectivity, knowing what worked and why it worked. In some cases, success can be an anomaly; meanwhile, it can be replicated on other occasions. Concerning disappointments, it’s crucial to analyze yourself fairly. Even in perceived failures, there are plenty of ways to assess things you have done well or most poorly.
For example, I knew a trader who suffered continual poor results. Upon a critical and mathematical analysis of his trading, it turned out that he was successful during the first two hours of the day. The difference between winning and losing was trading in the middle of the day when market action changes.
This brings me to my final point, that is, when it comes to summer trading, know your market. Some markets tend to slow down much more than others during this season. Frankly, it’s not healthy to expect that markets will perform the same way in all seasons, nor is it beneficial to assume your profit potential remains consistent. While some markets like the equity index futures will likely slow down, others, including certain commodities approaching harvest, will become much more active.
There are many other factors that traders must consider when approaching summertime trading. What is important is that you have a plan.
Until next time, trade well!