These days placing a trade in the early morning of the U.S Equities session brings with it, a high percentage chance – of just getting your face blown off.
Understand that the vast majority of what the industry defines as “dumb money” refers to those trades placed “before the bell” – as well those placed within the first hour after.
The “smart money” is generally buying or selling during the final hour of trading.
Pulling this apart – it makes pretty good sense. Newbie traders driven purely by emotion, catch wind of a news story overnight, or perhaps on the early morning financial news and “rush to get in” with fear of missing the move. Like lambs to the slaughter more often than not, price drops out from under them, fear sets in, perhaps even panic, and shares are then dropped / sold – only to be picked up on the cheap by the “smart money/big boys” just moments before the close.
Wash.Rinse.Repeat – and so the market goes.
For the most part, I view the “entire trading day” during the U.S session, as being nothing more than a meat grinder for retail traders, who generally enter at the wrong time, and in turn – are easily shaken out of their positions.
- Do you find it difficult to resist the urge to buy in the early morning?
- Do you think you could learn to condition your behavior, and consider buying the close?
USD on day 3 in a row literally “flat as a pancake” as Thursday is now in sight. I’m “still” holding a number of pairs (10 pairs actually) with little concern – short of being bored to death. I’ll keep my eyes open late afternoon and have little expectation of “anything big” happening here today.
still ok to be short aud/usd you reckon?
Nothin holdin me back – just exercising a bit of patience…..as usual.
Kong I’m must say i’m surprised you’re holding trades prior to the ECB press conference tomorrow. How come?
Let me guess: you expect not much change, hence the $EURUSD going down (among other things of course), which means profits for you, or anything else means you’ll drop the trades “in a heartbeat” if i dare quoting you. It’s just you mentioned several times trading after the fact, not before, it just gets me puzzled.
Cheers from France.
With so many news events, and so many “reasons not to be in a trade” what’s a guy to do?
I have to extract cash, I have to keep pushing so…….ECB could very well throw a wrench into things, but I’m not really focused on it.
I’m set up long USD here, but it’s been a struggle 3 days flat so ya…..could just as easily “dump all trades in 10 different pairs” in a heartbeat yes.
Currently across the board I’d be 1% up so…..not a great 3 days, and ya – could just as easily ditch and go on holidays “today”.
Kong brother… Shorter term (2-3 days to 1 week?). What do you think about long EUR, GBP, and NZD against JPY.
NKD looks like it’s finding some support at 14000 and those 3 pairs looks like forming a little bottoming action on 4 hrs chart.
You’d be playing a “risk on” trade so……against trend short term.
I imagine if you kept a reasonable eye / small positions and tight stop ( mentality ) you could catch it sure.
Not for me. At least not today, as I’m just getting my long USDs on the move.
Agreed with your sentiment here actually.
In answer to your blog post on time of time and trading… it depends entirely on the type of trader you are.
If you are only a scalper any time of the day is OK… you’re only chasing 2 to 5 pips.
A day trader needs to be careful, because they can be caught by things like news events, opening and closing quirks… chasing 10 to 50 pips maybe, and not keeping trades open overnight.
A swing trader may need to be careful also… they are gonna be trading off 60 min to 4 hour charts looking for 30 to 100 pip moves.
As a swing/position trader I don’t worry about news much, nor time of day… my charts are on a server which closes a daily candle at 5pm New York time which is 9am where I live in Australia. So my main time to study charts is before I head off on my daily activities. Price action using daily, weekly and monthly charts is the safest and easiest way to make money trading in my opinion.
All that being said, I do have some little known advice for traders living in time zones that can trade it… New York 11:30am to 1:30pm is a VERY nice time to trade. Wall St is out to lunch, and London is closing down for the day… a perfect time to trade 10 to 40 pip retracements. Unfortunately its not convenient for Australian/Asians, being about 3am to 5am, but is perfect for the rest of the world… check it out
2 – 5 pips?
You’re watching snow on a T.V with no cable.
That’s not trading.
You must love the casino as well.
Dear Kong, on the FX trading hours we’ve tossed this round a little before so forgive me if this covers old ground but here goes:
Trying to allow for the Sydney / New York time difference which is currently 14 hours ahead:
Now 8.30am in Sydney, 4.30pm in NY 30 mins till day close? Aus & NZ open at 9am
Tokyo opens at 11am Sydney time (7pm NY), so from here trading before this is slow and fraught especially around yen pairs. Early Tokyo trading tends to be orderly and moves slow and steady
Shanghai opens an hour later and adds a lot to volume these days, so many decent moves occur in the early afternoon hours here
Dubai/Abu Dhabi opens at 3pm Sydney time (11pm NY) and the wacky arabs throw their money around, usually in the EUR pairs
Frankfurt & Paris open at 5pm Sydney time (1am NY) and does sfa usually
London opens at 6pm (2am NY) but the volume tends to pick up an hour later when the FTSE opens so trading into the open is dumb unless there are already compelling moves from Asia.
Could not agree more about trading into these openings – might as well light up and burn your cash. You can have great technical setups but without sufficient volume moves often won’t follow through. I use the e-signal volume indicators on the 4hr chart to watch for supported moves versus fluky spikes.
What is also becoming more prevalent is that NY is increasingly counter trading the London market. Overextended positions tend to continue until NY wakes up and says wtf! Then the market rolls over and eases back. Pls correct me if wrong but I can’t remember the last time I saw London & NY trade a pair strongly in the same direction. This is not an issue for end of traders like me but short term traders need to be alert.
P.S. I don’t trade equities so times will differ, cheers.
Sweet baby Jesus this is boring. More upward movement for the yen and dollar I’m guessing
Scratch that. In the short term I don’t have a clue