Trading with time

Market hours

The forex market is open 24 hours a day, five days a week, from Monday morning in Sydney until Friday evening in New York, but it is not equally active all day. It moves through four sessions.

• Sydney: 10:00 PM to 7:00 AM GMT, the first session of the week and the quietest.
• Tokyo: 12:00 AM to 9:00 AM GMT, overlapping Sydney for a few hours.
• London: 8:00 AM to 5:00 PM GMT, overlapping both Tokyo and New York, and the most liquid.
• New York: 1:00 PM to 10:00 PM GMT, heavy volume while it overlaps London.

The Time zones lesson covers the sessions in more depth.

Why the hours matter

Liquidity: the hours decide how easily a currency can be bought or sold without moving the price, and the overlaps bring the tightest spreads. Volatility: each session has its own range, and the major economic releases are scheduled inside specific hours, so the size of the moves follows the clock. Opportunity: the London and New York overlap is when the most financial centers are active at once. Analysis: price behaves differently from one session to the next, and a strategy that works in one may not work in another.

Time as a confluence

Time is a confluence of its own. Many entries and exits can be set by the clock: entering around whole clock times and exiting around them, because psychological numbers apply to time as well as to price. Reading time well helps with three things: your entries and exits, maximizing a trade by knowing when the reversal times tend to come, and recognizing fake-outs.

Whole times

If you were meeting an old friend for coffee, you would not ask them to be there at 2:41 PM on the dot. You would say 2 or 2:30, and if you were running late you would say 2:15. Our brains work in whole numbers, and banks and institutions share that psychology. They do not place orders at random times; they place them around the whole-number times. So look for entries on the 30-minute increments of the hour, and plan exits the same way.

A New York example

A common entry is an hour before the New York session, at 7 AM Eastern, because the US futures are already trading and the volatility has started. Start watching the charts around 6 AM and look for entries on the 15 and 30-minute marks. One example: a buy at exactly 7 AM Eastern, at a whole number inside a point of interest, ran 120 pips on gold. Around 10 AM Eastern gold usually gives an intraday reversal, a news reaction or a continuation of the trend, so if there is no continuation in the price action, that is where partials come off. If the trend continues, the next reversal window is around 12 PM Eastern, Wall Street's lunch hour, which brings low volume and consolidation; if that does not happen, it tends to come two hours later, around 2 PM. Back-test this on gold and on other pairs. It is not right every time, and market conditions change, but the pattern in time is there.

Taking profit by the clock

Profit targets can follow the same clock. In New York the pivotal times are 10 AM, 12 PM and 2 PM Eastern; in London they are 4 AM and 6 AM Eastern. Look for further confluence around them: if the market tends to make its impulse at 7 AM and its correction at 10 AM, you can take the exit at 10 AM on a wick, the same way the entry came on a wick, instead of sitting through the correction.

Recognizing fake-outs

Have you been stopped by a fake-out, felt the market target your stop loss and then move your way, or talked yourself out of a trade the moment a big push went against you? The market is moved mostly by fear and greed, and the goal is to stay calm inside it: patient with entries, and impulsive only when taking profits. Time does most of that work. Entries are found on the 15-minute candles, but the decision to enter or exit waits for the close of the hourly or 30-minute candle. That keeps you out of the volatility that lives inside the 5 to 30-minute window, and leaves you reacting to what the market has actually done. You never want to predict the market; you want to react to it.

Your results by the clock

Every trade you log is stamped with its session and its hour of entry, and Reports breaks your results down by both, so you can see which clock times pay you and which ones fake you out.