Sometimes I think that some traders are quite lucky to live in the UK! And not just because of the Queen and Big Ben (one might think so)… No. Their UK living allows them to trade Forex at the most profitable times of the day. When they get up and have “traditional” morning cup of a tea, their FX trading starts at 8.00 (GMT +1:00) and later around 10.00 or 11.00. When it’s 14.30 on the UK clocks and watches the US markets open. But their job is actually done by then. With the fourth tea cup emptied and all lunch sandwiches eaten they start caring for own stocks. So… is worth trading FX after the US markets open?
My personal opinion – it’s not the best idea for several reasons. I’ll try to make them short:
- The high market volume and volatility will “die” as soon as European markets close (a few hours after the US session starts). If you haven’t already closed your positions for the day, you will definitely get your portion of frustration.
- The start of the American session often brings us, the traders, an armload of major news releases (14.45-15.00 in the UK). We know they can push markets easily as Schwarzenegger pushes trains and planes when being angry. However, those releases can cause the dramatic market movement, so all of your technical analysis (if you made any by then) would turn useless. Unless you are a trading pro, it is even harder to make your money in such conditions.
- The US-session market tends to become as calm and “stable” as a cemetery in the end. All big market moves for the day have already occurred. Last few hours of European markets trading within the US session are usually not generous with breakouts, for instance. Even if you get some, there could possibly be no “to be continued…” afterwards.
Summarizing, I want to say that there are still times when trading the US markets is profitable.
Cases when Forex trading the US markets is still profitable
Firstly, if you are the News trader. Download and use for free Forex freebie called FX Pulse. FX Pulse is a MT4 custom indicator that shows actual Forex news directly on chart in a second after its release. So you are waiting for the US session to start with your eyes burning fire and hands shaking with excitement (do you really?!). Such reports as NFP or FOMC can make price rocket in seconds as well as can drop it down to earth.
Another way of benefiting with the US markets open is the usage of certain time frames.
Even though most of my trades, which I place with my trading strategy, occur in the morning, I usually place a trade in the afternoon and evening. Not just for the interest sake, but whether a significant EMA crossover occurs in the time. If my profit targets have been reached, I will close the trades opened before.
As a conclusion, I would say that trading the FX market after the US session opens is not really worth it. If you are not the News trader and you are dealing with short term charts. Your trading window is narrow, and those are the market moving announcements that you have to deal with.
Although if you are using one-hour or four-hour charts, for instance, then trading during this time can be worthy as price will often continue moving for the rest of the day and (lower volume expected) into the next one.
Article provided by Alexander Collins, creator of automated Forex trading software that works since 2007 and have positive backtest and forward test results.
3 thoughts on “Who Else Wouldn’t Trade Forex After the US Markets Open?”
I am using automated Forex trading software myself since 2009 and what figured out is that the best time and most profitable I would say for software to operate in is somewhere between 13:00-17:00 Ny time. This is end of US session during those times market is more or less predictable to take small gains.
I would totally agree with your conclusion. I used to be in fx sales in London and things would really quiet down volume wise around 5 – 6 pm London time. Things would be slow until the close of the US Day (10pm London time) and not really start to pick up until the start of the Asian Market.
James, glad to read that you are agree with me. By the way, is it possible to guest post on your blog?
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