If any of you are a touch “frustrated” with your forex trading as of late – perhaps I can give you a little more insight.
It’s important to note that throughout the trading day ( that being 24 hours ) there are very specific times when markets tend to make their moves. Missing these times of high liquidity, and entering the market during times of low liquidity can be extremely frustrating for a newbie trader – and can really make the difference in your overall performance.
There is absolutely nothing worse than having your trade order filled, only to see within a matter of minutes that the trade has moved a considerable distance against you – or even worse that you’ve been “stopped out” before you’ve really even gotten started. It’s very likely you’ve simply been caught, entering the market at the wrong time – and not that your trade idea wasn’t valid.
If you want to trade effectively during the N.Y session, you’d better be prepared to get up early – very early.
I don’t have any supporting data to further verify this – short of my own experience, but what I can tell you is that 90% of the time the larger part of the move has already been made “before” the U.S pre-market equities session even gets started.
What you are “really seeing” is the last bit of Asia and the larger part of London’s session that have already made the majority of the move – while the U.S session tends to grind your account and ( for the most part ) move counter trend.
If you want to get a jump on the N.Y session – you need to be at your terminal and planning your trades at least a full hour before the open, then wait until the last hour of trading for further confirmation – or for opportunities to add.
Very often you’ll find that your trade ideas are actually fantastic, but it’s your market entry timing that needs a bit of polishing.
Mastering the London-New York Overlap: Your Trading Sweet Spot
Now that you understand the critical importance of timing your NY session entries, let’s dig deeper into the mechanics of what’s actually moving these markets during those crucial early hours. The real money in forex isn’t made by chasing breakouts at 10 AM EST when retail traders are just logging in – it’s made by positioning yourself during the London-New York overlap, specifically between 8:00-11:00 AM EST, when institutional order flow is at its peak.
During this three-hour window, you’re witnessing the convergence of two major financial centers, and more importantly, you’re seeing the European session’s momentum either continue or reverse as American institutions begin their trading day. The EUR/USD, GBP/USD, and USD/CHF pairs become particularly volatile during this period, as European traders are closing positions while American traders are establishing new ones based on overnight developments and fresh economic data.
Reading the Pre-Market Tea Leaves
When I mentioned getting to your terminal an hour before the open, I wasn’t suggesting you sit there and twiddle your thumbs. You should be analyzing three specific elements: overnight price action in major pairs, any economic releases from the European session, and most critically, the behavior of risk-on versus risk-off assets. If the AUD/JPY and NZD/JPY are making strong moves higher during the Asian session, while the USD/JPY remains relatively flat, you’re likely seeing early signs of USD weakness that could accelerate once New York opens.
Pay particular attention to how the DXY (Dollar Index) behaved during the London session. If it’s been grinding lower on decent volume while European equity markets rally, you can anticipate continued dollar weakness once American traders arrive. Conversely, if the DXY is holding key support levels despite negative sentiment, you might be looking at a potential reversal setup once New York liquidity hits the market.
The Counter-Trend Trap That Kills Accounts
Here’s where most traders get demolished: they see a strong move during the London session, assume it will continue through New York, and end up fighting the tape for the next six hours. The reality is that American institutional traders often take the opposite side of European moves, especially when those moves have extended beyond key technical levels without proper retests.
Take the GBP/USD as a perfect example. If sterling rallies 80 pips during the London session on no particular fundamental catalyst, there’s a high probability that New York traders will fade that move, especially if it’s approached a significant resistance level like 1.2700 or 1.2800. The smart play isn’t to chase the breakout at 9 AM EST – it’s to position for the reversal during the overlap period, then hold through the American session as the counter-trend move develops.
This is why your account gets ground down during the NY session. You’re not reading the institutional flow correctly, and you’re certainly not positioning yourself ahead of it. Instead of fighting against the natural rhythm of the market, learn to anticipate these reversals and profit from them.
The Last Hour Setup Strategy
The final hour of the New York session, from 4-5 PM EST, presents unique opportunities that most traders completely ignore. This is when European traders are beginning their next session, but American institutional flow is winding down. It’s also when you’ll often see the most authentic moves, as the day’s accumulated order flow finally resolves itself.
During this period, focus on pairs that haven’t participated in the day’s primary trend. If the EUR/USD has been the star performer, look at USD/CAD or AUD/USD for catching up moves. If commodity currencies have been weak all day, the last hour often provides the clearest signals about whether that weakness will continue into the next Asian session or if we’re due for a bounce.
More importantly, use this final hour to confirm your bias for the next day’s trading. If the USD has been weak all day but finds strong support in the last hour of trading, you might want to reconsider those dollar-bearish positions you were planning for tomorrow’s London open. The market often telegraphs its next move during these quiet periods – you just need to be paying attention when everyone else has already logged off.
So true Kong, I feel that your advice has gotten even more refined and relavent over the last week since you had your “Told you so” moment.
Keep up the good work and let us know when your subscription service comes out.
You are very intuitive Warren, and I appreciate your feedback very much.
Yes – I’m seeing this blog become a “business” a touch sooner than expected, and in turn want to provide the best info that I can. With so much junk available on the Internet these days, I would “love to think” that perhaps I can do a bit better.
So we’ll see.
In the meantime let’s just keep on rollin – and keep on killin it.
I dont know how you guys in Americas do it. Hells i wouldnt know how the Asians do it. There seems to be more meat on the bone during first half of London. I am thinking of moving to the US and Im wondering, does my working day start at 3am?
I live in Mexico, and am Canadian for what it’s worth.
First half of London is ideal really.
Me……I don’t sleep. Regardless of trading forex…….the post is here somewhere – let’s search “sleep”.
Our backgrounds are very similar Kong. I live in Chile, and am American.
I sometimes wake up at 5-6AM, so that I can trade the London-just-after-open.
I found it.
https://forexkong.com/2012/11/23/currency-trading-when-to-trade/
Kong, how many pips do you typically take out of the trades that work? Obviously, it varies, but I’m interested in what you view as a nice profit.
Best, Andrew
Hey Andrew….great question.
In general I don’t really look at an individual trade with a pre determined “take profit” as you’ve suggested – it will always vary depending on market conditions.
My style of trading generally has “larger trade ideas” take shape over time across a number of different pairs, with varied position sizes generally based on “ATR” and my general knowledge of each given pairs movement / volatility.
As the trade develops and “profits are seen” across the board – I will blow out the entire lot ( at times 12 – 14 pairs ) at any given time regardless of which are “deep in profit” and those that aren’t.
It’s not at all uncommon to have 7 or 8 that did great……and 3 or 4 where entry / circumstance didn’t produce a big win. I look at the net total based on my longer term strategy – and don’t sweat the odd loser.
AUD/USD setting up for a move…. I have squeeze play’s set-up from the 30min to the 4hrs….. will be looking for an entry long or short pending fire direction…
Well….for what it’s worth – there it is!
My long since yesterday has just been covered with “0” risk. I’ll literally spend any and all profits made long AUD on beer, Mezcal and likely more beer.
The short term tech is freakin solid as a rock, as that entry had been on my radar for a considerable time. Hilarious, and with absolutely “zero” expectations – I’m heading off to place trades elsewhere.
long positions entered of 30min positive fire in AUD/USD…. will add more after the 1hr fire…
What a life you have Hong i am jealous 😉
What do you mean Fuzz?
I work very hard, as I’m sure you do as well – and…… considering that I’ve more or less spent the last 15 years travelling the planet – there’s been plenty of “bad” ( and some real , real bad) mixed in there with the good.
I guess it’s like anything else in life…..you want something – you likely end up “giving up” something else. I’ve made many decisions in how I’ve lived my life – that has left me in some really tough spots with few close friends, or close to family. The grass is always greener so they say, as well one has to be careful what they wish for! You just might get it!
Yup – long & abnormal hours are kept to stay ahead of the game if one means to generate positive returns in this game…… not may have the discipline to stick with such s schedule…. not for the faint of heart either….. but Kong knows this all to well…
Up and attem! Wakey Wakey!
He he he….man no kidding – It’s a grind at times, but after a while – you “kinda” get used to it.
At times when I’m feeling like a zombie ( and cursing some of the bells and whistles my computer makes in the dead of night ) I’ll just head on down to the beach for a walk, and quickly remind myself that it’s all worth while.
A cold beer, feet in warm sand and the beautiful caribbean ocean generally get me back to reality and back at the computer!
Hi Everyone,
A disreputable statistician once said, “If you can’t count it you can’t fix it”. I did the homework because it makes me feel braver about gambling with my retirement money. Beer, vodka and tequila also help in that regard.
Here are some stats to reinforce Kong’s anecdotal evidence:
Stats for Daily High OR Low MADE AT TIME OF DAY (NYT)
NYT (New York / Eastern Time) = Auto adjust for Daylight Savings Time
Some folks believe a daily H or L is a significant pivot point and trade those levels.
51% during 3am-7am
32% 11am-1pm
30% 4pm-7pm
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Here are times of day when you have the opportunity to snag some portion of a 40pip (or greater) range. Remember, abuse leverage and you’ll never be sorry.
60min Bars With Ranges >= 40pips (NYT)
10-11am 44%
8-9am 42%
10-11am 41%
3-4am 35%
4-5am 30%
5-6am 28%
11am-12pm 26%
All other hours 1% to 15%, but majority are single digit %.
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I have stats and strategy P&L results for other stuff.
For example, a London ORB (opening range breakout) will make money!
Hope this helps. Bye for now.