I am sitting in a cafe in New York City as I write this. It’s a bit noisy, with many distractions such as nearby conversations, and a few young women walking past-which I invariably have to look at-but I just closed two trades (long XAU & XAG if you must know). Both were profitable. Normally, I trade on my laptop, but today I’m “armed” only with my smartphone, and using the “free” wifi at the cafe. I placed the word “free” in parenthesis because I paid for several espressos.
A few weeks ago, I was in Europe, and the trading was a bit easier. For one thing, I was located in the time zone I most favor for my intraday trading strategy. For another, I had my second laptop along, which afforded me an additional monitor and trading platform. The coffee was also better. Nonetheless, both trading venues, emphasized the positive feelings I have towards trading, with the overwhelming feeling of freedom and control being paramount.
Technology has really changed the game, and lifted many of the limitations that traders formerly endured. It’s one of the reasons that forex trading-particularly retail-has grown exponentially in the last several years. It has untethered many from rigid structures and routines which can keep us from fulfilling our potential. After all, many began trading as it held the promise to liberate us from “wage slavery,” or free us from jobs, careers or financial plans which restricted our lives in one way or another. The appeal of the non commute cannot be understated, and the ability to trade while we commute is of equal value.
Admittedly, it can be challenging to stay focused when trading outside of an office or home office environment. On the other hand, the convenience and ease of trading, is a decided plus. There is something about getting out and about, being amongst people, seeing life, that can clarify and solidify goals and aims. For some however, trading must take place in a very specific type of environment, replete with multiple large sized desktop monitors, Bloomberg or other financial news television playing in the back round, and their buttocks ensconced in the warm embrace of a fine leather executive chair. That’s great, though having options and choices that allow one more flexibility, can also help traders manage their time efficiently, as well as accomplish more tasks throughout the day. The “umbilical cord” that ties traders to their desks, is often more a psychological crutch, rather than a necessity of successful trading. Here are a few observations:
Review of Advantages of Forex Trading
Work anywhere. Work anytime. Most of our lives revolve around schedules, often ones we cannot change or influence. We have things to do, places to be, and some of those require us to be “on the road,” or in another location other than our office or home. The beauty of forex trading is that we can still be active in the markets, regardless of location. One of the few times we could not, was while traveling. A commodities trader whom occupied the seat next to me on a flight from New York to Hong Kong a few years ago, complained that the only thing he hated about flying was that he could not get updated market info during the 15 hour flight. As inflight internet is being introduced on many airlines, that is sure to change. There literally will not be a moment of market action that a trader cannot tune in to. Given that forex markets are open 24 hours during the business week, there are always opportunities for traders regardless of their location in the world.
Less isolation. Trading floors of major banks have one advantage. Traders are surrounded by other traders. Even if they don’t communicate with each other, there is something about being around other human beings, picking up information even if indirectly or seemingly by osmosis, that can help with decision making. Humans are social animals and sentiment is a market element that can often be ascertained by taking the “temperature” of those around you. While the anecdotes of those in our personal space is not scientific-and can lead to herd mentality-it can also help one measure the overall public mood. There is also something about being out of our comfort zone and in a different environment, which can help us see things from a different perspective. Even when we are monitoring the markets, chatting with other traders, reading the blogs and forums, being in public places can add information about underlying economic conditions and trends. It can be very subtle, but it’s there.
More focus, fewer trades. A strange thing often happens when we trade away from our regular place of business. We concentrate on the information that is most pertinent, ignore what is not, and conduct fewer trades. This is probably related to the time element. In our usual trading location be it home, office, or home office, we relax more. We tend to feel like we have the luxury of time. Ironically, this can lead to over analysis and over trading. Out on the road, traders tend to let trades run longer, and cut losing trades quicker. This may have something to do with being busier and pressured to make faster decisions, or possibly a result of traders not being subsumed solely by trading as they might be back at their desks.
Long term strategy works best. For position traders, mobility and location are rarely an issue. Regardless of time zone, traders can check their positions or setups, prepare entries and exits, readjust stops and targets, as well as conduct their “due diligence” by technical and/or fundamental analysis. Intraday traders can have greater challenges, particularly if their location conflicts with their schedule. For example, when I’m in New York, I have to wake up earlier so I can catch some of the London and European trading sessions. On the other hand, I get a jump on the Asian trading session when it opens, since it’s early evening on the East Coast of the USA.
Disadvantages of Currency Trading
You have to have the discipline, always. This can be tough to maintain. Even for those whom are comfortable being uncomfortable, this is a true trader’s test. Different locales, and/or time zones, can wreak havoc on the thought process and critical thinking skills. It’s far too easy to make trading errors as well. Moreover, some environments are more conducive to trading. While many are OK with a noisy cafe in Beijing for example, others might find it too “off putting” to be able to focus on business. Some traders require library like silence, others need to look out their windows and see green grass, while some get a lift from the energy and chaos of an urban environment. Switch the trading venues for these traders, and their trading results can suffer.
More difficult for intraday trading. Day traders have the biggest challenge being mobile. High frequency traders that manually trade (assumes they are not using automated Expert Advisors or algorithms) have bigger technology requirements. An iPhone, iPad, Android device, or even a laptop, may not be suitable, They might require multiple monitors to cover many currency pairs. Moreover, time away from the monitors usually means missed trading opportunities. It’s a drawback with day trading generally, as the time one must dedicate, is usually far more than position traders.
Fewer screens can mean less information. It can make it very difficult to receive all the information a trader needs, with just a smartphone or tablet. Most traders prefer a minimum of two screens. Many traders require three or more. This is directly related to the type of strategy a trader employs, as well as the number of instruments traded. A trader whom only focuses on the EUR/USD and the EUR/JPY for example, may be able to extract what he or she needs with one screen, but a trader of multiple currencies or commodities (or equities), is not going to trade at their peak when limited screens are all that is available. There are a few traders whom travel with a minimum of a laptop, tablet and smartphone and use all three to trade, but for many, this is inconvenient at best, and unworkable at worst.
Prying eyes. If you’ve ever traded in a public place such as a cafe or restaurant, you have experienced the curiosity of those whom may have spotted your charts or trading platform on your laptop or tablet. It can make one uncomfortable, especially when others can see account balances. Since a very small percentage of the population trades, the charts can draw questions, comments, as well as strange behavior towards the trader. In many places, trading is on par with gambling or worse. Traders can be viewed as speculators whom provide little benefit to society other than enriching themselves. When trading in public, people will often make their opinions known. On the other hand, it can lead to worthwhile conversations, but the trader usually wants to be alert for any potential outcomes. This in itself can be taxing.