So right now I have been trading on a Demo account testing out the 5, 10 EMA crossover method a little bit. I trade on the H1 and look to the H4 and D1 to see if it is trending in the same direction and see if the RSI is around 50. On Friday, I had a great day with a 34% gain. But at the start of this week (Sunday, Monday I am EST), I lost about all that. I couldn’t seem to get off good trades for some reason. 2 questions. Should I avoid trading on early weekdays such as Sunday and Monday because of volatility and it could throw off the trend? Any other things I should look for when entering a trade?
Timing does not count as price will retrace at interval and will reverse when done trending in one direction.
It looks like you did not have a proper risk management and position sizing? Just my humble opinion.
Lot of people avoid trading Mondays. They also trade light or not at all or only in the am on Fridays. Its all to down the risk and reward - no point risking all your money for half the risk. Days which are or are right before and after US public holidays are also likely to be light volume and volatile. For all these same reasons, many traders avoid trading 100% during the mid-summer.
Having said all the above, at any time on any day, using a MA cross-over as an entry signal is a very weak trading strategy.
I have to add that I also think your risk management is weak - it should not be possible to lose such a high % on any day.
As it was just mentioned before, it would be better to avoid trading during the days with the elevated volatility. Most of the traders close their positions at Friday noon to avoid exposing to risks of unexpected news and other events occured at the weekend. At the same time, Monday as the first day of the week is extremely volatile too because of the traders` reaction on all news and events took place during weekends. That is why it would be better to trade full lot size just from Tuesday to Thursday.
By the way, what are the main entering and closing signals for your strategy? Is it based only on MAs and RSI? Once I saw an example of such strategy, but have not tried to use it. Maybe, you should pay additional attention to the risk management rules. Appropriate risk management could help you to avoid large losses even in case of high volatility.
If we speak about such huge losses, the problem could be not even in risk management, but in money management in general as the menthod you use to define risk per trader and per day.
So, the checklist is the following:
- strategy itself (entry/exit rules)
- risk management (where to place stop)
- money management (risk per trade/day).