What is Market Awareness and How Important is it – How often Should you Check your Positions

What is Market Awareness


Market awareness is a complete understanding of a market. This means you know which factors can and do influence this sector, how it will react to certain events etc. Summed up, if you have a good market awareness you have a deep understanding and a lot of knowledge of a market. As an example someone with a good market awareness in the stock market (which is very broad) should always know of the latest major news affecting the stock market and always knows the general situation of it (e.g. upcoming raise in interest rates and effect on prices, other decisions of the FED, knowledge of big events like Brexit, elections…).

Many traders spend countless hours in front of their computer screens to constantly track their positions, to read about every market influencing news there is and constantly have business channels like Bloomberg or CNBC open. This lets barely any time over for family, friends or other activities. This will be a rather short article where I will try to sum up how often you really should check any positions and what you should know about markets/market news.

How important is Market Awareness

I would always recommend a trader, regardless of kind, to have some general market awareness. It doesn’t have to be much but just a general understanding of the current economic situation. I would shy away from using hours of time every day to read any market news. Instead, you can save tons of time by finding a good market news site and by beginning to skim the headlines of new news articles. You then only should read those articles that affect your open positions directly or have some other kind of greater significance. And even those you don’t have to read completely. As a bonus, it would help to have some kind of economic calendar which shows you all the upcoming dates of major market announcements.

Regarding earnings and dividends most broker platforms have features to show these dates directly on the chart.
If your broker doesn’t have this feature, I would suggest checking online before every entry. It’s a quick search and can save you quite a lot of money. If you aren’t planning on doing a special earnings or dividends trade, these events can create some unwanted swings in price and volatility.

The importance of a good market awareness also heavily depends on your trading style and preferred market. For example, special events and news have a much greater impact on the Forex market than on stock exchanges. Therefore, if you trade currencies in the FX market, you should be more aware of these events and should have a better market understanding than other traders.


How often should you check your Positions

I really don’t think it is necessary to constantly check any open positions. I feel it is more than enough to commit 5 to 10 minutes of your time to checking all the open positions and then eventually using more time if any actions are needed. But many people feel the need to constantly know what’s going on and find this little time committed to their positions very nerve racking which is totally understandable when you risk your hard-earned money. Therefore, I would always set alerts on your positions. Determine a point when to adjust/exit before your entry and then set an alert at this point. This won’t only make your trading more mechanically but also frees you from having to check your positions. With this you will always know if things work in your favor and you theoretically won’t have to check your positions for days or even weeks. First when you’ll get an alert on your phone or mail you should go back in and adjust or exit. I do recommend you doing this and using more of your time for other things than trading. You shouldn’t be sitting in front of your trading screen all day to maniacally track some charts.

6 Replies to “What is Market Awareness and How Important is it – How often Should you Check your Positions”

  1. Thanks for providing a great summary of what I should be looking at in terms of market awareness. This is an area, that as I novice, I worry about, and in a way stops me turning off from trading and directing some energy to my family and friends. So thanks again as I feel I can back off a little from constantly watching the screens.

  2. Market awareness is a science in itself. I too am a bit of a novice, but am learning a lot about, and want to thank you for this very intricate article. Honestly I am probably one of the people who will check their positions constantly. There is something about the control of it all that will keep me constantly concerned.

    1. He Joe,
      First of all thanks for your comment. Just like you, extremely many people constantly want this control when their money is at risk. But that can be very time consuming, that’s why I recommend to set these alerts.

  3. Thanks for this post! Having to commit too much time kept me from getting into options before. This article is very encouraging, as it allows me to believe I could be somewhat passive even with multiple positions open—although I understand that I shouldn’t have my head in the sand! Thanks louis

    1. Thanks for the comment, Ryan! Many people think that trading has to be a full-time job which requires you to monitor the markets all day. But the reality is quite different. Obviously, you could do this. But it isn’t always required. If you have a good swing trading strategy paired with some good risk management, it really isn’t necessary to constantly monitor the markets.

Leave a Reply

Your email address will not be published. Required fields are marked *