Best Times to Trade
One thing that I find more amusing than annoying now is trying to be on the screen at the “best” time to day trade. Previously the decision on what hours to trade were based entirely on volume. The more volume, the better the day-trading, was how our thinking went. It wasn’t all that long ago, a few years ago perhaps, when US hours were considered “best”. Those days are long gone now, despite the heavier volumes. My own forex mentor taught me that London hours are the best, so this is very much hard-wired into my head. Tokyo hours our thinking went, while a wildcard, were generally a temptation and a fade for day-traders. That assumption now, with a strong yen being such a powerful influence on so many of the other currency pairs, is just wrong. Below is a chart of EURJPY with volume. It’s easy in this case to see how volume picks up right at midnight CST, or 6AM London, and just past lunch in Tokyo. In this case that’s also when we see good “trend trade” with succesive candles of the same color.
Volume picks up again going into the U.S. session, but all too often the increase in volume leads to more jagged trade, with red and green candles interspersed, which keeps traders on edge.
Traders have to make the decision as to when to trade based on both volume and what’s best for their biological clock. Despite my own biological clocks preference for getting up w/ the sun, the best time for me to get up to day-trade is, sigh, midnight, which doesn’t fit my early to bed early to rise lifestyle. At least here in Chicago it doesn’t…now if I lived somewhere in the Mediterranean…one of these days…
Jay Norris
www.trading-u.com
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and may not be suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency.
I would definitely agree that trading times based on volumes is a right way.
Usually the jap & us market are very predictable. For me the europe market is most confusing. Most of my forecast went wrong. For example, if i saw the euro mkt turns positively green, their currency usually moves the opposite way. I dont know why this happened?
Hi Lim,
Is the method you follow trending in nature, or counter-trending? It sounds like it may be counter-trending