Preventing Risks During the 4 AM Trading Hours

Trading early in the morning can provide traders with a sense of freedom, as the brain is still fresh and ready for action.

However, the opportunity for profit can be reduced if a trader relies too heavily on leverage. The risk of being swept up by market movements is always present, which is why risk management is always necessary.

Traders should always remember that profit comes with risk. To protect their account, traders must be able to see the bigger picture of what is happening in the forex market and seek out the smallest risks that can be compromised.

It is true that the profit obtained will also be reduced if the risk taken is also small. However, over time, managing risk will bring long-term success to traders.

Risk Cannot Be Avoided

To prevent risk when trading early in the morning, or at the opening session, it must be understood that risk is something that cannot be avoided in forex. There is no business without risk, and the same goes for forex trading, regardless of the strategy and trading tips for profit that are used.

A simple example is when opening a clothing store, there is always the possibility that no customers will come, so it is difficult to just keep the store running. However, with the right decisions and research, the opportunity for success still exists, even if it takes a while.

The trading business is similar. Traders must conduct sufficient research to make solid trading decisions. Risk will always appear during the opening session of early morning trading, but risk will disappear as traders understand the market and how it moves.

Self-Control

The opening session is a time when the market has not yet determined its direction. From this, many traders will choose to wait outside the market rather than be in the wrong position. But for some traders, they are not afraid to open trades as soon as the opening session begins.

If you do intend to open a trade early in the morning, traders should prepare their mental state better so that they can control themselves no matter how the market moves. From controlling themselves, traders can then control their trades.

One of the positive aspects of forex trading is that traders can choose for themselves when to enter or exit the market. For example, when the market is still in a feeling-out phase and is not comfortable, traders can exit immediately to avoid any risk.

The problem is that most traders are not clear on whether to exit or remain in their trading position when needed. If the goal is to manage risk as minimally as possible, traders will not hesitate to exit the market immediately.

Although traders may miss out on victories, they are also free from losses. From this, traders also have the opportunity to control position sizing and the timing of opening trades to minimize risk. It only takes a few minutes a day to look for the best setup opportunities and place the ideal stop-loss position.

Steps like this will give traders the opportunity to have a more normal day outside of trading. If everything goes smoothly, it means there will be a balance between personal life and career as a trader.

Psychology of Trading

Trading early in the morning can cause a trader's psychology to become wild and sometimes uncontrollable. Just looking at the market's development can be dizzying, let alone trying to follow it. That's why, the psychology of trading must be strengthened first if you want to minimize risk.

Psychology may be the most neglected aspect by traders, even though it is one of the most important tools for winning trades. Let's assume that the market will move up or down for the long term. In theory, traders have a 50% chance of success for all trades.

The trader then decides to take a short position in USD/CHF as an example. As soon as the trader clicks the sell button, the market quickly reverses direction. The stop-loss with a 50 pip distance is then in danger of being touched quickly.

Unfortunately, too many traders change their stop position with the hope of still having a chance to turn the situation around so that the market changes direction according to the prediction. But what must be remembered is that the trader placed the initial stop position for a particular reason, so it should not be changed no matter what the current market conditions are.

But the worst part of this condition is that the trader will feel mentally pressured immediately after the first loss. The next step taken is to seek redemption from the market by opening other trades haphazardly.

The trader is very likely to take the opposite position of the initial trade and double the capital to quickly recover profits. But in most cases, trades with this motivation will not be successful. As a result, the trader actually gets one loss after another.

From this, traders are expected to improve their psychological condition of trading before truly diving into the market. With an ideal psychological condition, traders have a greater ability to avoid risk.

The Importance of Psychology in Preventing Risk

When starting trading, especially trading at 4 am, most traders only focus on a few aspects related to the market such as analysis and strategy but forget about trading psychology. In truth, trading psychology is just as important as analysis and trading plans.

For example, when receiving a loss, the brain immediately looks for reasons for the loss. Unconsciously, the trigger for the loss is not based on the analysis and plan made but rather on psychological and behavioral factors in the market.

What needs to be remembered is that trading psychology has a direct impact on trading results. Unfortunately, most traders are human and are prone to emotions. When trading begins, traders may experience many things such as emotions, happiness, fear, despair, and others.

To be able to control these psychological conditions, traders must be aware that psychology can affect trading results. By being aware of this, traders are expected to be able to find one point that can be used to control emotions.

Especially when trading at 4 am, even though the desire to trade is strong, it is very possible that the trader's psychological condition is not supported at all. Trading that is forced in this situation can end badly, and that means the trader is closer to defeat.

Even success in 80% of trading is influenced by psychological factors. How good and great a strategy and trading plan is made will be in vain if the trader cannot use it well psychologically. Victory will be far away, while defeat is closer.

However, traders do not have to be a skilled psychologist to win trading. This is not related at all because essentially trading is just a 'game' that is based on statistics which are then processed with an ideal mental condition.

The most important thing to be successful in trading at 4 am is to keep emotions always controlled. Forex trading is no different from other jobs that have advantages and disadvantages. Therefore, the approach given must be serious and full of responsibility.