With the 24 hour availability of the Forex market, some traders think that they need to be in it all of the time. You know who you are. You’re the Forex trader with black circles under his eyes from not sleeping, and no social life left to speak of. And although you figured those sacrifices would pay off in huge dividends, your Forex account does not look any different from the next guy’s, maybe even a little worse.

Why is this? Because there times when you need to pull out and take a break. Remember, the key to making money in Forex trading is learning how not to lose any. This not only means having great money management skills, but also having the presence of mind to know when it is just not time to trade.

Personal Reasons

Attitude means a lot in Forex trading, as well as your emotions. Sometimes you will need to look at your own to decide if you are in the right frame of mind to make the right decisions about your trading. Ask yourself the following questions if you think that your state of mind may be messing with your trades:

• Do I feel greedy? Greed is not a trait that works well when trading Forex. Greed usually comes from a desperate desire to make money, and it is that desperation which will encourage you to make bad choices. If you are trading today because your car payment is due tomorrow, stop right there. Deal with your financial problem some other way and pull yourself out of the market until your greed dies down.

• Am I over confident? This will usually surface after you have had a few successes in the market and suddenly think you deserve a super-trader cape. This cockiness will spill over into cutting corners on your analysis, thinking you are too good for stop loss orders and taking bad risks. If this sounds like you, step away from the platform and come back down to reality. There is no such thing as luck in Forex. Your successes happened for a good reason. Study your journal and the market charts to find out what that was and make a strategy around it before you put that cape on.

• Do I need a break? Some of us, myself included, get so caught up in the trading that we forget about our personal needs. There is absolutely nothing wrong with answering this question with a yes, and then closing the laptop and grabbing a fishing pole instead. I have found that taking a break makes me a better trader the next day. After days upon days of looking at charts and analyzing data, it all just starts to melt into one. When I come back from a break, everything looks fresh again and I make better decisions.

Market Reasons

There are certain markers in the market and with a currency pair that also tell you that now is not the time to get in on a trade. Many good traders believe that learning these not-to-trade signs is even more important than knowing when to jump into the market.

• Weekend trading. Don’t leave your pair open over the weekend. Yes, the market is closed, but a Saturday night speech by Obama can change everything you thought should happen to change in a second. Unless you are long term charting and trading, you should plan your exits before the weekend begins.

• Entering with a news release. Economic news reports will cause the market to go volatile as traders struggle to figure out what it means for their pair. When economic reports are getting ready to be released, stop your trading and wait until they have been and everything has calmed down before jumping back in.

• Breaks in resistance and support. The support and resistance lines on Forex charts are very important, as they help visualize a trend. It may seem like a good idea to enter when those lines are crossed, as you know a pivot is inevitable. This is not the best time though as there is likely to be a stall while traders rush to get out of position. Again, wait for all this pressure to calm down before investing any of your money back into the pair.

• No obvious trend. Volatile markets make it very difficult to spot trends, even on long term charts. If you are noting that there is no peaks or valleys, but rather a steady stream of upward and downward movements than you can’t logically enter the market, as you can’t figure out what it’s going to do. Trend spotting is the backbone of charting and successful trading, how can you then justify entering a trade if you figured out which way the pair is trending?

Hand in hand with learning when not to trade is learning how to not lose money. If you have any hope of building a large Forex account, you must figure out how to make sure it doesn’t get depleted. This means learning not just the market signs of when to get out and chill, but also your own personal signs. Take stock of both of these everyday and you will see how sometimes it actually pays for you to not be in the Forex market.

About the Author

Casey Stubbs is the founder of WinnersEdgeTrading.com which is one of the most widely read forex sites on the web. Winners Edge Trading has trained thousands of people to trade the Forex markets.