August 17, 2011
Is It Worth Trading Forex After The US Markets Open?
I always think I'm very fortunate to live in the UK (although it hasn't been too great recently) because it allows me to trade the forex markets at the most profitable times of the day. For me these are the hours between 8.00 (UK time) and around 10.00 or 11.00. When the US markets open at 14.30 (UK time) I have pretty much finished for the day and will probably be paying far more attention to my stocks. So is it worth trading the forex markets after the US markets open?
Well for me I don't believe this is a great time to trade for various reasons. First of all you have the UK and European markets closing a few hours later, which means volume and volatility will instantly drop off. Therefore you are going to be frustrated if you haven't already closed out your positions for the day.
You often have major news releases at 14.45 or 15.00 just after the US markets open, so this can dramatically move markets and throw any technical analysis you may have done right out the window. It also makes it even harder to make money, unless you are a skilled news trader, which very few people are.
It is also the case that many of the big price moves for the day will already have happened earlier in the day. So by the time the US markets open and we enter the last few hours of trading in Europe, there are very few opportunities to trade new breakouts, for example. Plus even if you do get any breakouts during this time, they may not have any momentum behind them.
Having said all that, there are still times when it can be profitable to trade after the US markets open. It all depends on which time frames you are using.
Although a lot of the trades that I place using my main 4 hour trading system (fill in the form above for more details) will occur in the morning, I will often place a trade in the afternoon or evening (and sometimes overnight if I am still up) if a decent EMA crossover occurs during this time. I will also close trades out during this time as well if my profit targets have been hit.
So in summary I would say that it's not really worth trading the forex markets after the US markets open if you are using short term charts because you have a narrow trading window and you have market moving economic announcements to deal with as well.
However if you are using longer term charts such as the 1 hour or 4 hour charts, for example, then it can be worth trading during this time because price moves will often continue for the rest of the day anyway (albeit on lower volume) and into the next.