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Best Time of the Day to Trade

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attachment.php?attachmentid=15359&d=1369279797

 

Base on this graph that I have seen somewhere in the internet, what is the best time of the day to trade? Does this one require you a particular time zone? Or does trading in every part of the day will be helpful, I heard that timing means profitability, so how does this two things correlate?

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Best time is during London & US market overlap between 13:00 GMT to 16:00 GMT. These are the most liquid hours and when most of the traders are creating action.

 

It doesn't matter where you are, just learn how to convert GMT to wherever you are. :cool:

 

Good luck!

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The "best" time of the day depends on the skill level of the participant.

 

For skilled participants, the preferred times to trade are at the open, close and prior to events.

 

For non-skilled participants, there is no "best" time. Due to their inexperience or lack of skill, non-skilled participants will generally lose money no matter what time they trade because they do not 1) have strategies tailored to the opportunity and 2) do not have the skills necessary to recognize opportunities as they develop and finally 3) do not have the necessary experience or confidence to enter trades promptly when opportunities present themselves....

 

The "best" time of the day then, is any time you can find a skilled participant who will let you watch him/her execute trades....learning the profession that way, you minimize risk and can observe how other (presumably profitable) participants operate...

 

To illustrate these points, I have attached my charts for today's opening (morning trades). The left most chart shows the initial entry, the update shows the progress as we hold the position and the right most chart shows how important it is to continue to hold through the opening time frame as participants determine value.....without this volatility the market goes nowhere....with it, you make money....but you have to have the skills in place to handle it.

 

Oh and for the "critics" who will say it isn't in "real time"....you're right....you see I ACTUALLY TRADE and therefore I don't have the time (and I couldn't care less) to post and execute trades....figure it out...use it to your advantage.

 

Best of luck

Steve

5aa711e951c3c_FirstMorningTradeEntry.thumb.PNG.4ce30777d1da7c77f63c42d2aed13718.PNG

Update.thumb.PNG.202ac6c729ded7f69b9caa343813af77.PNG

5aa711e964a39_10ptswinner.thumb.PNG.a56b30ac09857de046e0e1f240f37176.PNG

Edited by steve46

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You could rely on a load of anecdotal recommendations, or you could just do some very simple statistical analysis and get an answer to your question that is actually meaningful . . .

 

This thread might help: When Does Your Market Really Move?

Kind regards,

 

BlueHorseshoe

 

Yes if only it were that simple.....the markets (all of them) move if & when big players decide to move them....nothing anecdotal about that....its simply a fact of life...and the way one gets a hold of that information is to find someone who knows when that is...and is willing to show you or tell you how to find out....

 

One example...a while back there was an opportunity to trade oil profitably and many did including quite a few retail traders....at some point, predictably that opportunity dried up and many of those same retail traders were caught on the wrong side, having to respond to "calls" for additional capital into their accounts.....each day approximately at lunch hour, the compliance offices of several brokerages had to liquidate positions....if you KNEW when this was going to happen, you could (and I can assure you many skilled persons did) enter trades AT THAT TIME knowing that odds greatly favored one side of the market.....again its a matter of experience and knowing where the opportunities lie.

 

"Simple" statistical analysis lacking context is often misleading and it only goes so far...and this comes from someone who taught the subject...by all means incorporate statistical analysis into your approach. It is a valuable tool.....however, NOTHING beats experience and knowledge of the day to day mechanics of the markets...this is true of every profession.

 

Good luck

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Here is another nice example that just happens to occur at this time of day

 

Its called a "position offset" and it reflects the fact that a group of institutional and commercial participants HAVE to reduce or flatten existing positions at a specific time of day in order to comply with their internal rules....does it happen all the time....no, but it does happen enough that I (and many others) look for it at this time of day...and on specific days of the week depending upon the release or pending release of economic data (context).

 

Good luck folks

 

PS and I have attached another chart showing the close of the "offset"....I "suggest" to students that they don't trade past 1pm PST....because of the possibility of automated execution causing distortions in the tape. Also this trade resulted in an approx. 5 point win and this is one of the places where I will either scale out or exit depending on the aggregate volume...looking at the lower pane, you can see that volume starts to ramp up....that tells me that this is an appropriate time to exit...I post these charts to my blog for those who may have an interest in it...PM me for the information, I won't publish it on this site.

5aa711e99fccb_OffsetTradeEntry.thumb.PNG.b729dc4e2e840e388b2de1384bb16d37.PNG

5aa711e9ca20d_CloseofTrade.thumb.PNG.1d8c716b9e67711d16db7b2a3923f3c0.PNG

Edited by steve46

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For trading forex i must say best time is the Asian timezone as the price movement is relatively slower and the Europeon and US market timezones making much clearer and non-random price actions.

 

For trading stocks best time would be the opening and closing hour and a half....

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"Simple" statistical analysis lacking context is often misleading and it only goes so far...and this comes from someone who taught the subject...by all means incorporate statistical analysis into your approach. It is a valuable tool.....however, NOTHING beats experience and knowledge of the day to day mechanics of the markets...this is true of every profession.

 

Hi Steve,

 

I totally agree - more specific information about when certain types of events are highly likely to occur would be much more useful.

 

However, if this were unavailable to you, would you sooner listen to someone's unsupported statement on a forum, or would you go out and try and find some evidence of your own for what actually happens (albeit in support of a very generalised statement)?

 

For example this kind of thing: "big fx moves tend to occur around the London open because that's when the big institutions trade" . . . it's pretty easy to work out whether or not this is actually the case.

 

Admittedly, knowing that large positions will be unwound on a particular day at a particular time would be more useful, but how often might I be privvy to such information? Most of us work with more generalised information most of the time . . .

 

Regards,

 

BlueHorseshoe

 

ps. I wasn't accusing you of making such statements, but there are plenty of them posted here by others. One of them - MaksymGra - is probably perfectly correct, but that's not the point - the point is that anybody serious should be investigating this for themselves, not listening to what someone says on a forum.

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Here is another nice example that just happens to occur at this time of day

 

Its called a "position offset" and it reflects the fact that a group of institutional and commercial participants HAVE to reduce or flatten existing positions at a specific time of day in order to comply with their internal rules....does it happen all the time....no, but it does happen enough that I (and many others) look for it at this time of day...and on specific days of the week depending upon the release or pending release of economic data (context).

 

Good luck folks

 

PS and I have attached another chart showing the close of the "offset"....I "suggest" to students that they don't trade past 1pm PST....because of the possibility of automated execution causing distortions in the tape. Also this trade resulted in an approx. 5 point win and this is one of the places where I will either scale out or exit depending on the aggregate volume...looking at the lower pane, you can see that volume starts to ramp up....that tells me that this is an appropriate time to exit...I post these charts to my blog for those who may have an interest in it...PM me for the information, I won't publish it on this site.

you picked a fine time to leave us steve46...with 4 hungry children and a crop in the field...we've seen some bad times..been thru some hard times..but this time your hurting won't heal........................

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Is it just me, or does the sub-pane below your chart show equity with -700k down the right hand axis?

 

BlueHorseshoe

 

 

Yes, I did not reset the data counter prior to the open....so it is incorrect.....so that you understand what I am doing. I am more concerned with the visual display of trending aggregate volume. I place markers at specific times (I call them entry frames) and I watch as participants act.....their actions provide two (2) data points, the first is acceleration of orders (which is impossible to show in this venue but can be seen in real time), and the second is volume in relation to my markers....I call this a volume trigger...as volume moves past my "marker" if I think the odds favor continuation (on a test of one of my key reference points for example) I enter the trade....from that point forward the only reason I look at price is to scale out....if volume never comes back to test my entry frame, I stay in the trade....no more worrying about whether I am leaving money on the table....

 

By the way, I did not think you accused me of anything in particular...but wanted to put my opinion in context....I agree with your post.

 

PS....here is an example of my display...as can be seen here the volume on this 10 min chart (which I set up correctly prior to the open) is probably closer to reality.....I say probably because I am experimenting with Ninja and don't have confidence in it just yet....typically I cycle through the 90,30,10 and 3 min time frames...

5aa711e9e6848_Todayscharts.thumb.PNG.412c72007b8c5b4456ce364bcc175baf.PNG

Edited by steve46

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Is it just me, or does the sub-pane below your chart show equity with -700k down the right hand axis?

 

BlueHorseshoe

LOL LOL LOL :rofl: :rofl: actually i think it may some sort vol BS....however..at least he uses vol...better than most....one thing you gotta hand to him..he does seem to work hard and does his damnest to make useful posts (?) he is johnny on the spot....unlike myself......for my posts are mostly BS...but not all....

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Another superb post Patuca, demonstrating your extensive knowledge of the subject....

 

Here is an example of how we trade events using our current system. Bias is determined early on, and we input our knowledge of the mechanics and our expectation for Chairman Bernanke to comment in a specific fashion. Up to this point in time everything is going as planned as Bernanke talks about Feds plan for maintenance of future easing, expectations for inflation and unemployment. These are the three subjects that have the potential to move the market.

 

Bias was down initially, and the left most arrow shows the initial move confirmed by volume. As volume continues to trend, the second arrow displays our entry and because volume supports our decision, we had no reason to capitulate. So basically there are two issues to consider, the first is having a systematic approach that allows you to obtain an edge, the second is a way of confirming bias, finding entry and managing (holding a position) until it move one way or the other....

 

Most of our process is planning, and it is done the night before....unlike those folks who tell you when to buy and sell, we TRY to provide useful context so that a person has the opportunity to learn something that they can take and run with....in the morning as events unwind in front of us, it is all about execution and adjustments as needed....

 

If the reader follows their own charts you will see that this paid off for us today.

5aa711e9f01dd_TodaysFOMCTrade.thumb.PNG.fd80189403dc7dc55d9e17a6bcf2c894.PNG

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and here is an example of a profit target hit. If you look carefully, you will see that price came up to "press" our entry point, but looking down at the volume pane, it did NOT agree....therefore no reason to stop the trade....ultimately price failed at this point as the market resumed its move south...(for the moment). Looking for a test 1625 or thereabouts as projected low.

5aa711ea01f22_Profittargetexample.thumb.PNG.76ecd35d47f5ba4fefd84bfc7ef54452.PNG

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and here is the final chart showing the conclusion of the final (short) trade entry of the session

 

As can be seen, the low is near 1622 and we will probably end up near to our projected target of 1625

 

In terms of critical times, there are two issues to understand, certainly it is important to know when to trade (when the best opportunities are likely to be available).....what new or struggling traders also should know is when to stand aside....for example, we will manage an existing position through the last hour, but we will not for any reason, keep open positions or enter trades during the final 15 minute stretch...

 

Good luck folks

5aa711ea08103_Tradeupdate.thumb.PNG.62be3d601ea6ccf2716611514552dfa3.PNG

Edited by steve46

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Another superb post Patuca, demonstrating your extensive knowledge of the subject..

 

 

Thanks..i don't get many compliments like that...:rofl: :rofl: good for the ego you know....

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If the reader follows their own charts you will see that this paid off for us today.

you kicked a$$ today didn't you? I didn't have the pretty blue..purple retangles to go by but did mention on the PM thread something about a plunge on indices ..soon...to sort of counter suntraders gloating...anyway the plunge may have started today......... Edited by Patuca

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From my point of view, if I did my job well, then yes I am mildly pleased about that.....but I learned long ago to modulate my emotional response to this business...there are other more important things in life to be exuberant about.......this isn't one of them...just my opinion.

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you kicked a$$ today didn't you? I didn't have the pretty blue..purple retangles to go by but did mention on the PM thread something about a plunge on indices ..soon...to sort of counter suntraders gloating...anyway the plunge may have started today.........

 

From my point of view, if I did my job well, then yes I am mildly pleased about that.....but I learned long ago to modulate my emotional response to this business...there are other more important things in life to be exuberant about.......this isn't one of them...just my opinion.

I am always well pleased about a job well down..in markets or anything..and really pissed at myself when i drag ass around and do a sloppy job when i knew better and could have done better but just got lazy....or whatever....

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Okay then I would have thought that the concept was well illustrated.....best times to trade are the first hour and the last.....(sorry about repeating myself) and (once again) I use volume to tell me when to get out....and today it told me to stay put....so I am just watching and scaling out....

 

Here is the chart for today

 

Good luck

 

PS Just out of boredom, did you think something was going to change?

5aa711ea5fdf1_TodaysPreferredTimeEntry.thumb.PNG.ea54485673d32426f636d318dc6b93f1.PNG

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I guess one more data point might be interesting to those who reviewed my "Simple System" over in the Emini section....

 

With ES volatility at 17.7% today, I simply calculated the SDs and I expect that a trending market has the potential to test the 2nd SD....Volume has the last word on this but right now we are pretty close...

 

While so many of you (those that actually trade) are debating whether to take profits or stay put, I am simply monitoring the data and doing what it "tells me" to do...

 

Good luck folks.

 

PS...okay then its 12:30 and we are at about 1582 and I am pretty bored with this....so I am going to close out and go elsewhere....seeya

5aa711ea69786_PendingTestof2ndSD.thumb.PNG.43b80d8929a548d75badb5c6db690787.PNG

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Okay then I would have thought that the concept was well illustrated.....best times to trade are the first hour and the last.....(sorry about repeating myself) and (once again) I use volume to tell me when to get out....and today it told me to stay put....so I am just watching and scaling out....

 

Here is the chart for today

 

Good luck

 

PS Just out of boredom, did you think something was going to change?

the blue boxes do not allow you to trade this sort of price action like today? Do you do any swapping over to some other system for days like this?

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