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Attachments: Profit From Profit-Taking —Scalping the Session Close
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Profit From Profit-Taking —Scalping the Session Close

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  • First Post: Feb 28, 2007 6:34pm Feb 28, 2007 6:34pm
Here's an idea I just came up with. I haven't done any testing but I thought I would post it to get some activity going.

Theory:

The forex is certainly a speculative market. Most of the trades are very short-term; many of the trades last less than two days. Suffice it to say that there are many day-traders on the forex. With this in mind, we can expect that many traders will be looking to close their positions at the end of their trading session (if they haven't done so already). Evidence is provided by the existance of the "quiet session," the period of time after the North American session closes (17:00 EST = 22:00 GMT) and before the Asian session opens (about 19:00 EST = 0:00 GMT). In fact, unless there is some news report due, the market will usually quiet right down as soon as London leaves the scene (12:00 EST = 17:00 GMT). So the idea is to steal a few pips while these day traders are closing their trades and taking their profits at the end of their sessions.

Setup:

1. Wait until just before the close of the London or North American sessions.
2. See what the directional bias (trend) is for the day, up or down. We will assume that the "smart money" has a winning position for the day (and that this is usually where most of the capital is) so they are now looking to close their positions at the end of the session.
3. Enter at the close of the last bar of the session in the opposite direction of the major directional bias for the day.

Areas of Research:

- Well first of all we need to see if this theory is sound. Does it work?
- Next we need to find what stop levels and take-profit levels work best.

I will be working on this research when I get a chance.

-mathematician
look forward to your results Mathematician

Trade well
Trade Well
Quoting mathematician
Here's an idea I just came up with. I haven't done any testing but I thought I would post it to get some activity going.

Theory:

The forex is certainly a speculative market. Most of the trades are very short-term; many of the trades last less than two days. Suffice it to say that there are many day-traders on the forex. With this in mind, we can expect that many traders will be looking to close their positions at the end of their trading session (if they haven't done so already). Evidence is provided by the existance of the "quiet session," the period of time after the North American session closes (17:00 EST = 22:00 GMT) and before the Asian session opens (about 19:00 EST = 0:00 GMT). In fact, unless there is some news report due, the market will usually quiet right down as soon as London leaves the scene (12:00 EST = 17:00 GMT). So the idea is to steal a few pips while these day traders are closing their trades and taking their profits at the end of their sessions.

Setup:

1. Wait until just before the close of the London or North American sessions.
2. See what the directional bias (trend) is for the day, up or down. We will assume that the "smart money" has a winning position for the day (and that this is usually where most of the capital is) so they are now looking to close their positions at the end of the session.
3. Enter at the close of the last bar of the session in the opposite direction of the major directional bias for the day.

Areas of Research:

- Well first of all we need to see if this theory is sound. Does it work?
- Next we need to find what stop levels and take-profit levels work best.

I will be working on this research when I get a chance.

-mathematician
What about taking the price at 0.00GMT and the price at 16.00GMT (I can see reversals tend to start about 4pm). If the price at 16.00GMT is below that of 0.00GMT then you go long (opposite to the trend of the day) and if the price at 16.00GMT is above that of 0.00GMT then you go short.

A target of 20 pips should be achievable most days.

These are just some first thoughts after randomly selecting past days to backtest on - it looks quite good at the moment.
Thanks JillyB, I'll have to check that out. It makes sense, maybe most of the UK traders are getting out within the last hour, not right at 5pm GMT.
It will work. Try any intraday backtest strategy on alpari data, and close the position at 1700. Watch the profits go way up. Smart money is done for the day and as you said, taking profits, so ride that mini trend till asian. It would be interesting to write a little EA to buy/sell everyday at 1700 opposite the day trend and see what it comes up with. Backtesting the TK daily, by closing the trade at 1700 versus 2200 resulted in 700 more pips of profit over the year data. Look at any hour chart for today. Go opposite for 15-20 pips. I dont see a looser.
Not sure if this will help, but I did a quick check of what the 15 GMT and 16 GMT candle did verses the trend from the beginning of the year and found the following:

15 GMT - With the trend 25 times; Against the trend 12 times.

16 GMT - With the trend 29 times; Against the trend 8 times.

Here's the funny part though, on the 12 times that the 15 GMT candle went against the trend, the 16 GMT candle reversed and went with the trend!
I'm not sure this is a large enough subset of data. I'd like to see a few years of data. 37 datapoints just seems a little small.

Quoting gblair
Not sure if this will help, but I did a quick check of what the 15 GMT and 16 GMT candle did verses the trend from the beginning of the year and found the following:

15 GMT - With the trend 25 times; Against the trend 12 times.

16 GMT - With the trend 29 times; Against the trend 8 times.

Here's the funny part though, on the 12 times that the 15 GMT candle went against the trend, the 16 GMT candle reversed and went with the trend!
mathematician:

Nothing wrong with picking up a few scraps for the day. Because of my work schedule I have to look at longer term charts so I'm interested in what you are doing here. And as far as those scrap$ go, one of my 'buds' is leveraged at about $150 a pip so...you know...
If we can take 10 pips there... with leverage that would be sweet.
Quoting C.E.O.
It will work. Try any intraday backtest strategy on alpari data, and close the position at 1700. Watch the profits go way up. Smart money is done for the day and as you said, taking profits, so ride that mini trend till asian. It would be interesting to write a little EA to buy/sell everyday at 1700 opposite the day trend and see what it comes up with. Backtesting the TK daily, by closing the trade at 1700 versus 2200 resulted in 700 more pips of profit over the year data. Look at any hour chart for today. Go opposite for 15-20 pips. I dont see a looser.
Very interesting... so are you entering at 16:00 and exiting the trade at 17:00 or are you entering the trade at 17:00 and exiting at the Asian session?

I am assuming these times are in EST (GMT - 5)...
OK, the reason i'm posting this is that some of us are having good success utilizing it to visualize areas of opportunity at/near session close/open specificaly near the London Open and New York Open, and also the NY close/Asian Open. This screen shot is of the Box 5 indicator crated by Hapalkos, with a couple simple tweaks by myself.

The idea is to pick a 24 hour period, or session, and then change the "NumberOfDays" setting to look back over a period you wish to check out for possible patterns. Granted even this is to small a "subset of data" as mrmikal pointed out, but it might be the catalist of greater study.

Anyway, it's set to show what is discussed in this thread, London 4:59 ends the day. By changing the user settings you will be able to see different "closes". I've got several saved with different names showing many different sessions. This is about the easiest way to visualize what the trend of the past 24 hours has been in simple price action looking at the Open/Lime, Close/Magenta, and Median/Yellow lines. The Session High/Low is marked by the dotted Yellow line trimming the gray rectangle. FYI the verticle dotted lines are regular day's close on my broker's feed which is 17:00 Eastern time.

: ) Thom

http://www.accrete.com/fx-mirror/mt4...oseExample.gif
Great indicator, I like seeing the previous days and sessions high/low for reference.

Quoting accrete
OK, the reason i'm posting this is that some of us are having good success utilizing it to visualize areas of opportunity at/near session close/open specificaly near the London Open and New York Open, and also the NY close/Asian Open. This screen shot is of the Box 5 indicator crated by Hapalkos, with a couple simple tweaks by myself.

The idea is to pick a 24 hour period, or session, and then change the "NumberOfDays" setting to look back over a period you wish to check out for possible patterns. Granted even this is to small a "subset of data" as mrmikal pointed out, but it might be the catalist of greater study.

Anyway, it's set to show what is discussed in this thread, London 4:59 ends the day. By changing the user settings you will be able to see different "closes". I've got several saved with different names showing many different sessions. This is about the easiest way to visualize what the trend of the past 24 hours has been in simple price action looking at the Open/Lime, Close/Magenta, and Median/Yellow lines. The Session High/Low is marked by the dotted Yellow line trimming the gray rectangle. FYI the verticle dotted lines are regular day's close on my broker's feed which is 17:00 Eastern time.

: ) Thom

http://www.accrete.com/fx-mirror/mt4...oseExample.gif
heh, u read my mind. there always seems to be real volatile movements from 24:00 ~ 01:00 hr.
{Promotion Removed}
Fellow pippers: I have been looking just recently to another variation of this at the close on fridays. I am usually so burned out that I shut down the computer at 16GMT but am now looking at trading after that. We all know that most short and swing traders will probably close out their trades for the week not wanting to risk what might happen over the weekend. On Aug 3 the yen pairs and gbp/chf moved 100 + from 18GMT to 20GMT based partially on the stock market. Still should close out before the weekend. Don't have any more info but something to watch. Appreciate any other observations.

Well They say that there’s a pie up in the sky; Waiting for me when I die; But between the day you’re born and when you die; they never seem to hear you when you cry; So as sure as the sun will shine; I’m going to get my share of what is mine….. Jimmy Cliff
Does anybody tried this method? I'm very interested in the result of aplying this method.
And what pairs did you think are best for this method?
I will try this method from today. I will post result... i think it's a good oportunity to achieve 10 pips per day from a few pairs.
I will try with these pairs: Eur/usd, usd/chf, gbp/usd, gbp/jpy, eur/jpy before 1 hour london close.
Any sugestion from others who tried this method?
Quoting raad
I will try this method from today. I will post result... i think it's a good oportunity to achieve 10 pips per day from a few pairs. I will try with these pairs: Eur/usd, usd/chf, gbp/usd, gbp/jpy, eur/jpy before 1 hour london close. Any sugestion from others who tried this method?
Okay, go ahead. When you're doing it and getting results, do not forget to inform us here so that we also know the result. so it will be able to be a learning experience for us in order to become better.
Quoting raad
I will try this method from today. I will post result... i think it's a good oportunity to achieve 10 pips per day from a few pairs. I will try with these pairs: Eur/usd, usd/chf, gbp/usd, gbp/jpy, eur/jpy before 1 hour london close. Any sugestion from others who tried this method?
just one suggestion:
if you want to trade this ( or anything else) on a live account, try to avoid opening highly correlated trades.
eg. eurusd-usdchf or eurjpy-gbpjpy, etc.
there is always, always another trade!!
I'm curious if anyone has been forward testing this idea? If so, please share your results.
Backtested over 7 years on EURUSD. No edge.
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