Time of day to trade

So, I'm a complete beginner to this stuff. I have decided that I want to start off practicing on short term (~1 day maximum) charts. Various reasons for this, the main two being that having a lot of "screen time" fits my lifestyle very well, and I feel that making frequent trades early on will get me used to basic analysis faster than a more conservative style on a longer term chart. I am fully aware of the criticisms of this style, particularly for beginners.

For now, I am trying to restrict my methods of analysis to what seem to be the fundamentals of technical analysis: Support/resistance, basic candlestick patterns, trend lines, and other "simple" indicators. I would like to make reasonable progress with just these before I move on to MAs and other "advanced" indicators. I am going by the assumption that these techniques are timeframe independent (conceptually, accuracy may/will vary), and that frequently practicing them on shorter timeframes will help me build a base skillset that I can apply reasonably well to whatever my trading style evolves into.

My main question is, how important is the time of day for the trading style I have outlined? More specifically, is it absolutely vital that I only trade during the US/London (I think thats it?) overlap if I'm going short term, or is it okay to place trades pretty much whenever my broker allows? While I am on the computer more or less constantly, the times I would actually want to focus on this are pretty random. As is, if something goes horribly wrong at 2AM EST, I'm unsure if it was luck, if I made a mistake, or if I'm just not supposed to be trading at all at 2AM EST.

You sound like you have been reading up for some time and taking things step by step, which is a very good way to approach forex.
It is certainly important to know when and which markets are open, but its not a major factor, just somthing to be aware of (unless your strategy is designed to exploit the fact markets are open or closed - which doesnt directly apply to what your going to use). As I said tho it is somthing for you to be aware of , so get the times of when markets overlap and be aware that these will have higher volumes of trading.
At the miniute though it doesnt sound like you have a strategy, just that you know what indicators you want to use. The way I learnt was litterelly learn the basics, and get to know them. Such as chart patterns and what they mean? elliot wave theory is a must also. Then I started using some really basic strategys that used MA's and other indicators. It sounds like you are following a similair path to me actually.
So really in answer to your main question, no its not vital to trade the US/London market open time for short term strategies. There are even short term strategies you would be better using in low volatility times (i.e. when the markets are quite). You are better to make your strategy suit your lifestyle, rather then make your lifestyle suit the strategy. Remember its not a race.
Last bit of advice I could give is take your time and dont rush into it, use demo account first for a couple of months making sure you are making consistent profit before going live. While your using demo you are likley to go through several strategy's untill you find one that suits you.By then you will have a much deeper understanding of indicators and how they work.
Good luck and enjoy it.

Don't get stuck on your computer all day. The times to trade are london and early us session. make sure you spend some time away from your charts everyday. Afternoons are very slow.

I trade from 3am to noon eastern time. I don't spent the entire day at the computer tho, just long enough to get trades in. Most of the time that's 4am, 6am, or the 8am to 10:30am block.

For the rest I have automated alerts, computer beeps when it's time to move SL to breakeven, computer beeps when it's time to take profits, even have it set to send email alerts to my cell phone if I'm out.

Once everything's set up I like to take a nap or get chores done. Good time to do laundry or read a book.

I should post this in the MT4 forum, but the question I have is related to time of day.

We have the ATR which shows us the volatility over the last several periods. Is there something shows volatility only by the type of period we're looking at?

For example, say I have a scalping system that needs lots of volatility. I can exit positions in minutes. I only want to trade during the most volatile times of the day. Is there some type of indicator of widget box that can show the average volatility over the course of a day broken down in to 10 minute periods? Essentially it would show all those 10 minute breaks and list a number or line showing volatility. It's not something that can actually be overlayed on a chart. Although, we could tell it to only use the inputs from the last 20 days or so.

Sortof. You could use the ATR indicator on the 5 or 10 minute TF. No reason it would only be a daily indicator. Problem is there's no consistently volatile time frames like that. Generally speaking the volatility will occur on... 3am, 4am, 6am, and the 8 to 10:30 block (eastern US time). 5am, 7am, 11am and on tend to be quieter times. Then there's a burst after lunch, but it often doesn't amount to much.

But as soon as you say "ok, I'll trade at 4am" the volatility will just as often be at 6am or 10:30, lol. By the time you've got an indicator that's measured it, it's already passed.

Well you'd still only be looking at the ATR for the past couple bars. What I'm saying is to get an indicator that says for the past 20 days at 8:00 GMT the 15 minute bar has averaged this amount of volatility. Repeat for the other X amount of 15 bars in a day.

Oh, the average for that specific time frame over time... don't know of any, no.

Thanks guys, this is exactly the kind of info I needed. I am indeed the type to read a lot about something before seriously applying myself to it, though that has proven to be a challenge with Forex, due to insane number of viable approaches.

I'm really liking candlestick patterns so far. Even though theres a lot to memorize, you can easily understand the "why" of each one. I'm sure I could try to figure out why Stochastics and such work, but it would take quite a bit of reading.

I'd heard of Elliot Wave Theory, but didn't know it was one of the more "fundamental" concepts and had marked it down for later. I'll do some reading on it tonight. As well as this "ATR" stuff you guys are talking about, since you made me curious~

hi,

On my short term system I only look to trade from Paris open to US session.

agree with what has been said afternoon in US session can get very slow so I have a rule of not taking trades late in US session as well.

Good trading.

Hi everyone,

This thread is very helpful. I was wondering the same thing myself. Glad to see that someone else is being cautious. I'm assuming there are strategies that target the lull of off-hours or other specific times of the day though? I can tell it's pretty easy for a new trader to get sucked in and lose everything in a short period of time. That's exactly what happened to my brother actually, he did well for a week and lost everything the week after.

That being said, I've been doing my research as well and I'm taking it one step at a time like you. Several months on a demo account is in my future, I can see it

I have opened my first account about year and half ago but I have only been taking it quite seriously for only last few months. In many ways I have been doing similar things to you, I consider myself a bigginer, but I have never paper traded, instead trade small account. The reason being is that I lose interest completely when I paper trade and you are just not put throught the emotional rollercoater that come with trading for real. So I thought if you want to learn this you need to take time to look at the charts and that's why I'm trading small accounts, not too small so that it becomes irrelevent but just big enough so that it hurts when you do lose but still not become suicidal.

After spending many hours infront of my screen, I'm beginning to think that if you are intraday trading, times you get into trade should be a major factors in your trading strategy.

Anyway the genral picture I'm beginning to develope is this. Before the major markets open, things are very quiet, basically everyone is waiting for the markets to open, and just before markets open you see a lot of taking out of obvious nearby stops and scalping from major market movers. When the market, say Europe, just open then volatility increases but things are very choppy and there is no major trend but the currencies do still move abit, basically I believe they are waiting for the news and London to open. When london opens, again the volatility increase but it's still choppy until about 10pm GMT, before then you again see taking out stops, scalping and trying to get the entries in and so on. So after about 10pm, you tend to see sizable move in one direction, where everyone is looking to join in on the short term trend. But then about hour before US open things starts to consolidate and can become choppy again, and about an hour after US opens what you often see is the reversal of the previous morning trend, not always but seems to happens fairly often. My reading of that is this, people who made money in the morning (Eruope and UK that is) are cashing in on their profits, and also, people who didn't get in the morining they are looking to get in on the reversal or the retracement, and this can create initial momentum for reversal. Anyway once the afternoon trend is on the way it tends to move significantly, that lasts untill about 4-5pm GMT, when the Europe and UK are closing, and again during these time you often see reversals, which I believe happens for the same reasons I've mentioned before. Anway after about 5 pm volatility reduces and either things stoll along or consollidate.

Similar things tend to happen with Asian session but with less volatility. However there are no major moves on EUR or GBP untill hour after Hong Kong opens, that around 1am (again GMT with summertime).

Of course what I describe as choppy only applies to 5min, things tend to be less choppy in higher time frames.

Anyway conclusion is that from 10am -12pm things trend and move quite abit and from 2mp - 4/5 pm where the major moves usually happen and from 5-8/9 thing tend to stroll along with less volatility.

I hope this helps and I'd like to hear what other people's view are also. I appologise for the long essay.

CoolJL should write "London opens [...] until about 10am GMT [...] to 2:30pm GMT when US opens"

As a newbie, I think it can not be bad to spend more time in front of the charts. because it is very important to find how the price react in different situation. But when you become more familiar with this market it is vital to not become addict to it and have the power to not being in the market all the time and you control the market not market controls you.