I’d like to begin trading on the daily time frame, but I need some understanding on a particular matter.
Forex teachers seem to be unanimous in saying that the best time to enter a trade is when the daily candle closes at the New York closing; but I’m in Hawaii, and the New York close is at noon here when I’m working and cannot get to a computer to trade. Should I jump in before I leave for work, about 6 A.M., 6 hours before the NY close? And when I get home from work, NY has already been closed for 3 hours. What’s the best way to work this?
It depends on your method of trading. The NY close is 6am in my city (Perth, Australia), and I’m usually still fast asleep, and might not get up until 8am, 2 hours after the NY close.
Price might move a bit after the NY close, but only a bit. The first 3-4 hours after the NY close are usually extremely quiet (exception: the USDJPY and AUDUSD), so you’re not missing much. If I sleep in, I might not check the chart until 10am (4 hours after the NY close), and then put in my pending orders.
It’s not necessarily the best time to enter a trade but if you are trading the daily chart (assuming your broker uses NY close) then the candle has actually closed & it gives a better indication of what the market is going to do.
If I’m trading longer term, I look at the charts come NY close but I’m placing orders as opposed to actually manually entering a trade. Some might be filled overnight (I’m UK based), some might get filled throughout the next day so there is no immediate urgency to look bang on NY close.
So all in all, in your situation, I would look after work.
In my view the mrket is dynamic, but if you have trust on theses ystem trading, I think currently many broker also provide mobile platform like as for android, if you far away from personal computer, hence you can use mobile platform as second option if you have time and trust will open trades on these session market.
If you trade Daily charts, [B]any time after the New York close, and before the European open,[/B] is a suitable time to do your chart analysis, manage your open trades, and look for new trading opportunities.
You might choose to place a market order (to enter immediately) during this analysis period — but, more probably, you will be choosing entry points for [I]pending orders,[/I] which may get triggered anytime in the following 24 hours.
The reason that many swing-traders and long-term traders favor the time after the New York close for analysis and order entry is simply this: There is a major lull which occurs in the currency market between the New York close (5pm New York time) and the Tokyo open (6pm or 7pm New York time, depending on time of year). The lull in this time period is typically characterized by scant price movement, and very low trading volume. Prior to the New York close, many traders — anticipating this lull — unwind intraday positions taken during the trading day. This action tends to complete (or suspend) some of the price patterns developed during the London and New York sessions, making chart analysis after the New York close simpler, more stress-free, and more leisurely, than at other times of day.
After the Tokyo open (8am Tokyo time, 6pm or 7pm New York time), and especially after the opening of the stock exchanges in Tokyo, Singapore, and Hong Kong (9am Tokyo time, 7pm or 8pm New York time), the currency market (notably the yen, aussie and kiwi pairs) tend to get busy.
But, then there is a second lull, later in the evening, prior to the opening of the European market.
[B]And this fits perfectly into your time schedule.[/B]
Around 11pm New York time — which is 6pm your time — the Asian/Pacific markets typically experience a noticeable slow-down. At this time of day, the markets in Wellington and Sydney are about to close for the day, and the markets in Tokyo, Singapore, and Hong Kong are paused during the traditional lunch-time recess in the Asian stock markets. When the Asian session resumes in the afternoon, the action is typically muted compared to the morning action — probably due to caution among Asian traders prior to the European open coming shortly thereafter.
This mid-session lull in the Asian market, beginning at about 6pm your time, and basically lasting for about 4 hours, is your best window of opportunity for doing end-of-day analysis, reviewing and managing your open trades, and placing pending orders to enter new positions overnight or next day.
Here is a 5-minute chart of the EUR/USD, showing price and tick-volume over the past 5 trading days. I chose the 5-minute time frame in order to capture the price detail which gets lost in daily candles. Dotted yellow vertical lines indicate the New York close at 5pm New York time (12-noon your time) each day, and solid green vertical lines indicate 11pm New York time (6pm your time) each day. In this overview, you can see the relatively tame price action in the vicinity of the vertical lines (both yellow and green).
And here is a zoomed-in view of Thursday and Friday of this week, in which I have expanded the tick-volume histogram, so that you can see the lulls in volume.
For end-of-day chart analysis, I think that 6pm your time will work as well for you, in Hawaii, as 5pm New York time works for me, here on the east coast.
I’ve scanned your responses and I’ll be studying them in detail, but I didn’t want to wait before I thanked you for your input. I suspect very strongly that my answer is in your posts.
Thank you for your usual painstakingly thorough and clear response. Your screenshots with the volume indicator made it as clear as a bell.
I understand your explanation for the advantage of analyzing possible setups and entries on the daily time frame during the lulls, and you mentioned two lulls, one at the NY close and the other prior to the opening of the European market.
But is there any advantage, at all, in trading after the NY close? That is, is there any “magic” in waiting for the candle to close to trade the daily time frame? (Obviously, the daily candle will not close prior to the opening of the European market.) Also,
Would you offer the same advice to place an order on the weekly time frame? Would you say that the lull after the NY close on Friday would be best, or will any lull during the week work comparably as well?
A little off topic, but what the heck: One of the factors in determining which of the longer term time frames I’ll trade on is the average time I could expect the trades to last. Let’s say I’ll be trading reversals and my trades will be wins. Are you able to tell me how much time, or how many candles or periods I can expect to transpire for each of the following time frames?
4 hr:
daily:
weekly:
I tried to address that question in my previous post.
I’ll repeat what I said before, with some bold type for emphasis —
The reason that many swing-traders and long-term traders favor the time after the New York close for analysis and order entry is simply this: [B]There is a major lull which occurs in the currency market between the New York close (5pm New York time) and the Tokyo open[/B] (6pm or 7pm New York time, depending on time of year). The lull in this time period is typically characterized by scant price movement, and very low trading volume. [B]Prior to the New York close, many traders — anticipating this lull — unwind intraday positions taken during the trading day. This action tends to complete (or suspend) some of the price patterns developed during the London and New York sessions, making chart analysis after the New York close simpler, more stress-free, and more leisurely, than at other times of day.[/B]
Are you sure you mean that? The daily candle always closes before the opening of the European market.
Some platforms open and close daily candles at 5pm New York time; some at midnight GMT; others at midnight New York time. All of these times are prior to the opening of the European market at 2am New York time (7am GMT).
There is [B]no[/B] trading (in the [I]retail[/I] forex market) after the NY close on Friday. The Friday close is the weekly close. Trading resumes sometime after 8am Monday, New Zealand time (2pm [I]Sunday,[/I] New York time; 9am [I]Sunday,[/I] Hawaii time), depending on the particular broker.
The first few hours of the new week can be an especially risky time to enter a trade, unless you’re a gunslinger. And for swing-traders or position traders, who may be holding open positions over the weekend, those positions [I]can[/I] experience eye-popping price swings at the weekly opening.
If you’re holding open positions over the weekend, you will want to check their status after the market opens for the week. But, in most cases, you should keep your hands off the keyboard. Your predetermined stop-losses will take care of business, if prices are moving too far in the wrong direction.
Several of your questions have me a bit confused. You speak about trading a particular time-frame, but I’m not clear on whether that time-frame is where you intend to look for trends, or where you intend to look for set-ups, or where you intend to look for entries into the market.
If you are trying to develop a multi-time-frame trading plan, then please identify all of your time-frames.
If you are [I]not[/I] planning to use multiple time-frames, then I encourage you to rethink your approach. A multi-time-frame methodology — utilizing 3 time-frames — is the gold-standard of trading in most financial markets, including forex.
Example: One system for day-trading and short-term trading utilizes the 4-hour chart, the 1-hour chart, and the 5-minute chart. This is the plan used in The 3 Ducks Trading System taught on this forum by Andy Perry. If you aren’t familiar with The 3 Ducks System, you should take a look at it.
Andy’s thread has been running for years, and it’s enormous. So, you might not want to read the whole thread. But, you can get a start by skimming the first 50 pages, or so, and reading only Andy’s posts. Then, be sure to order his free e-book.
Swing-traders can apply the 3 Ducks methodology to higher time-frame charts — for example, the Daily, 4-hour and 1-hour charts.
The gist of multi-time-frame trading is simple: analyze the overall trend (or [I]the absence[/I] of a trend) on the highest time-frame; look for a set-up (in the direction of the trend, or counter to the trend, or within a trading range if there is no trend) on the intermediate time-frame; and look for a suitable entry point on the lowest time-frame.
As to your question, above, about how long trades might last, on average — I’ll answer in terms of trading styles, with suggested chart time-frames. Please understand that these numbers are somewhat subjective; other traders might offer significantly different numbers. Anyway, here is my answer:
• A scalp (or scalping trade) is a trade in which the entry and exit are expected to occur seconds or minutes apart, and the profit target is 30 pips or less. True scalping trades are normally too fast to lend themselves to multi-time-frame analysis. Often, a true scalper is focused on one chart only — either a 5-minute or 1-minute chart. Some scalpers work entirely off tick-charts.
• A day-trade (or intraday trade) is a trade in which the entry and exit are expected to occur within the same trading day, and the profit target is 30-100 pips. Appropriate charts might be the 4-hour, 1-hour and 5-minute charts, as Andy recommends.
• A short-term trade is a trade in which the entry and exit are expected to occur within 2 to 5 trading days, and the profit target is 100-300 pips. The same trio of charts recommended for day-traders, above, would be suitable for short-term traders.
• A swing trade is a trade in which the entry and exit are expected to occur a week or more (up to several weeks) apart, and the profit target is 300-1,000 pips. Suitable charts for this style of trading might be the Daily, the 4-hour and the 1-hour charts.
• A position trade is a trade in which the entry and exit are expected to occur weeks, months (or even years) apart, and the profit target is 1,000 pips or more. A position trader might choose the Monthly, Weekly and Daily charts.
None of this is cast in stone. The only thing that really matters is what works for you.
I’m getting ready to demo some trades on daily time frames, and your statement above in conjunction with another that you made in a prior post in the same thread, leaves me with a question.
Here’s the other statement: “If you trade Daily charts, any time after the New York close, and before the European open, is a suitable time to do your chart analysis, manage your open trades, and look for new trading opportunities.” The reason you gave is because of the slowdown of the market during that period.
Obviously, the “slowest” forex period is the weekend. From that perspective it is the best time to look for new trades. However, if I set a pending order based on a setup I find on a weekend, that would seem to conflict with what you said about keeping hands off the keyboards at the Monday open because that’s when my trade would be kicked off. Would you say, then, that it’s best to look for trades between the NY close and the European open midweek and set pending orders at that time instead of on weekends?
The retail forex market isn’t “slow” on the weekend – it’s [I]closed[/I] on the weekend.
From the Friday close*, until the Monday open**, there is no retail trading. Period. No live price feeds from retail brokers. No possibility for manually entering or exiting a position. No possibility of placing a pending order.
And, if you’re holding an open position over the weekend, there is no possibility that your SL or TP will be triggered before the retail market reopens on Monday.**
Saying that the “slowest” period in the forex market is the weekend
is a little like saying the “slowest” people on the planet are dead people.
That being said, the weekend is an excellent time to [I]study the market, and strategize potential trades[/I] for the coming week. But, you cannot interact with the market during the weekend period.
Regarding “setting a pending order”, let’s be clear: You can find a setup over the weekend (while the market is closed), but you can’t place that pending order you refer to, until the market re-opens on Monday (late Sunday morning, your time).**
Regarding “keeping your hands off the keyboard”: You’re taking my statement out of context. I said —
In case that advice is not completely clear, let me elaborate. If you hold an open position over the weekend, you are taking the added risk of a gap-opening on Monday (Sunday, your time). If this gap is in a positive direction for your trade, and hits or overruns your TP, congratulations, your gamble has paid off. On the other hand, if the gap is negative for your trade, and hits or overruns your SL, you will be kicked out of your trade, possibly at a price much worse than your SL-price. In either case, there’s nothing you can do to prevent what’s about to happen. So, just sit on your hands.
Furthermore, if your analysis over the weekend indicates [I]a potential trade for Monday[/I] (or later), wait for the dust to settle after the market opens for the week, whether there are price gaps, or not. In other words, once again, “hands off the keyboard”.
You can look for trades anytime 24/7/365, even on weekends and holidays. But, you can’t interact with the market, through your retail broker, on the weekends (or typically over Christmas or New Years). So, at the extreme, pending orders can only be placed between the Monday open and the Friday close.
I’m not a fan of placing orders during the first 8 hours, or so, of the new trading week. In other words, I’ll sit on my hands at least until the later hours of the Tokyo Monday Session (say, 6-9pm Sunday, your time).
And I’m not a fan of holding trades over the weekend. So, I’m not likely to place a pending order after the close of the Tokyo Friday Session (9pm Thursday, your time).
[B]The Friday close[/B] is an actual, hard close – as opposed to the arbitrarily-chosen “opening/closing” times for daily candles during the week. At the Friday close, retail brokers actually close their trading platforms, and prepare to turn off the lights and go home for the weekend. This close occurs at 5pm Friday, New York time (noon on Friday in Hawaii).
By contrast, during the week, the “close” of the retail trading day (and the simultaneous start of a new trading day) occurs at a time arbitrarily chosen by each retail broker. At this arbitrarily-chosen time, the broker’s daily candles will close, and the next day’s candles will open. Note that all other candles between H2 and H12 are synchronized to this daily “close”.
** [B]The Monday opening[/B] of the retail market is somewhat variable, depending on your broker. Technically, the retail market opens for the week at 8am Monday New Zealand time. This would be 2pm Sunday New York time, and 9am Sunday Hawaii time, during the winter – or, 4pm Sunday New York time, and 10am Sunday Hawaii time, during the summer. (Isn’t Daylight Saving Time fun?)
However, retail brokers in the U.S. typically don’t open their platforms for trading that early on Sunday. For example, FXCM, the largest U.S broker, opens trading for the week at 5pm Sunday New York time. Your broker may open for the week at a different time.
I can see that Norm is in Hawaii so I would add one small rider, not for his benefit but for a more comprehensive picture - if you’re not US-based but can access a financial spreadbetting account (e.g. UK and other jurisdictions) you actually can enter pending orders over the weekend. You can also amend previously set stop-losses or profit targets. Manual opening and closing of trades is not possible.
Of course, as you suggest, whether its wise to set new SB trade orders during the weekend is a whole other matter…
Thanks again for taking the time to respond extensively and patiently to my queries. I think you sense that I’m serious, and I appreciate your painstaking responses.
I’ve known all along that the market was completely closed on weekends. I put quotes around “slowest” as a little mini-joke, but it obviously didn’t come across.
Now, to my take-aways from your explanations: I didn’t know that I couldn’t even place an order on weekends and have it sit in limbo until it was executed when the market reopened. So, there’s another cog that fell into place for me. I’ll need to wait until after the market opens; and on that note, I’ll follow your lead in not placing orders until the later hours of the Monday Tokyo session. I didn’t realize it took that long for the dust to settle after the Monday open.
Thanks again for the insights. Hopefully, before long, I’ll be able to report net profits in live trades.
Sorry for stomping on your joke, Norm – that was totally unintentional on my part.
Sometimes it doesn’t take that long “for the dust to settle after the Monday open”.
But, then again, sometimes there are days like [I]yesterday,[/I] when the GBP-pairs gapped dramatically. The gap-down on the GBP/USD at this week’s open was 190 pips, on my chart, and it took hours for the pair to “settle” around the 1.2050 level.
But, my comment about waiting until the later hours of the Tokyo Monday Session goes back to our original discussion about using the daily, repeating “lulls” in the market to enter trades on the daily charts.
Here’s a quote from my first response to you in this thread, in post #6 –
I don’t trade Monday for the first 4-8 hours as the market has no real direction during the early Asian session.
From an Australian POV, the Asian session is the quietest, the UK session is frantic with many reversals, twist and turns and the US session which is the easiest to trade for me as the market tends to follow trends and direction more cleanly.
We do have a few benefits in the “colonies” as we are able to hedge and place pending trades over the weekend…
Just my opinion but the market this week seems very subdued with nearly all pairs ranging…
A 190 pip gap is enormous, enough to scare the crap out of a newbie. How, then, is one to trade the daily? If I open a trade on Sunday night my time, and close it on Friday, that gives the trade only five candles to make a move worth trading; and of course, if a retrace happens during that time, I might earn $.01, with 25% of that going to capital gains (if my figures are correct). Yet, many successful traders of dailies do leave trades open over the weekend. At this URL, Should I Hold My Trade Over The Weekend?, Timon Weller says, “A common gap is 30 to 50 pips.” With that in mind, and taking into consideration that stops are often larger than that on dailies, one wonders whether in the long run one would come out ahead. I know you said you’re not a fan of leaving your trades open over the weekends; but in one of your threads, if I remember correctly, you said you trade the 15-minute time frame which, of course, enables trades to close out much sooner than five days. How would you trade the dailies considering there are only five candles in a week?
Ah well, you see - US holiday today (Martin Luther King Day), plus last leg towards change of President. The UK has the volume in forex but often needs the US to confirm direction.
