I get this question almost daily: What are the best times for trading price action strategies. The answer is a basic one, but with one caveat. You see, price action works in any market and on any time frame because we are not relying on unreliable indicators, nor are we waiting on the stars and moon to align just perfectly before we take a trade. When trading with pure price action, we are relying on the footprints of the traders along with their current actions, and that’s the only way to trade profitably in the long run in our opinion.
To be perfectly honest, you can trade any market with price action and at any time, but we prefer trading futures with price action and we prefer regular trading hours over the extended market hours. There are many reasons for this, and we actually discuss these in some of our other posts here on our website, but understand that our preferences for day trading futures has nothing to do with price action strategies and everything to do with reliability and safety of our trading funds.
Forex is simply not regulated well enough for us, and there are those tricky spread betters that we suggest you stay far away from as well. Stocks are your second best bet, but it is very costly to day trade stocks and you need a much larger trading account to maintain a day trader status in stocks.
Now that we have that out of the way, we realize that there are many people that are simply going to trade Forex, no matter how hard we try and steer them towards futures, so in that case, you need to know which ones are the best and when is the best time to trade them. Here is what James Stanley had to say in a recent article he posted at www.smh.com.au.
One of the greatest aspects of the FX market is also something that should be taken into consideration when building, or trading a strategy. And that is the ‘time-of-day’ in which the strategy is being executed.
The FX market never closes. When doors are shutting for the day in New York, different doors are opening in Sydney for the start of a brand new day. And the machine known as the FX market does not stop. It just keeps on trading, allowing me to jump on for the ride at any point I might see fit.
And even though it’s the same FX market regardless of what time the trader is observing; it doesn’t necessarily mean that everything will be the same. As a matter of fact each major geographic market center can exhibit vastly unique traits and tendencies that may allow me to more effectively execute my strategies.
In this article, we are going to touch on each of these sessions as we had investigated in the previously released articles ‘ Trading Tokyo,’ ‘ Trading the London Session,’ and ‘ Trading the US Session.’ The trading week begins with liquidity coming in from Wellington, New Zealand – starting the ‘ Asian-trading session.’
We looked at this period of the day in more depth in the article ‘ Trading Tokyo.’ This was the period of time that had been determined to be ‘ The Best Time of the Day to Trade Forex’ in the DailyFX Traits of Successful Traders research series.
In ‘ The Best Time of the Day to Trade Forex,’ Quantitative Strategist David Rodriguez presents the logic that because of these smaller hourly moves and the fact that support or resistance may hold with a greater degree of consistency, trading ranges and range-based strategies could be the operative mannerism of execution. See the entire original article here.
Our experience is more related to trading the US hours, and we have found that while there are some great moves in the extended hours of the US trading times, that the waits are often very long and it can be difficult for most traders to maintain their edge and the necessary patience to wait on the best price action set ups. In addition, a move can end very quickly and the pace of trading can change so rapidly that it’s often difficult to understand what’s going on, making it much harder to read the price action properly.
We always suggest trading futures first and foremost, and if you want to trade currencies, then that’s all fine and good, but trade them via the futures markets where your money is safer and you don’t have to worry about crooked brokers trading against you. Secondly, we recommend sticking to the regular trading hours in the US, which range from about 9:00 AM EST to about 4:00 PM EST. This will be when most markets have the best liquidity, thus making them the safest time to trade.
If you must trade the Forex markets, which we know many of you will, then follow the suggestions you found in the article we cited. You may want to go and check out the full article and see what the writer had to say so that you get the entire picture that he is painting for you in regards to what are the best times for trading price action strategies when it comes to Forex. Learn more about our price action trading system at http://priceactiontradingsystem.com/pats-price-action-trading-manual/.