Trading and trading sessions: should you pay attention to time?
In almost any Forex textbook, at least one small chapter is devoted to trading sessions tied to specific time zones and countries. You have probably read that during the Pacific session the market is calm and predictable in most cases, but when Europe and especially the US are involved in trading, on the contrary, it can be too volatile. But few people pay attention to these features.
The authors of such books are partly to blame for this: if they say that it is important to pay attention to this factor, somehow in passing. Therefore, no one considers it significant. And completely in vain. If a trader trades on long timeframes, from D1 or at least from H4, it is not necessary for him to give much importance to this factor. But if the time frames he uses are below H4, then knowing how volatile the market is at any given time becomes very important.
However, this information will be useful to any trader. Take the time to create a 4-session chart according to time on your computer, or better yet, hand-drawn/printed and hung on the wall near your workplace. This will help a lot at work.
Why does a trader need knowledge of trading sessions?
Trading sessions and trading – should you pay attention to timing?Many, even working in Forex for several months, have a very superficial understanding of how trading sessions and trading operations are interconnected. Do I need to pay attention to the time? Certainly yes!
Let’s start with those for whom this is less important: traders who prefer medium-term trading (those who choose long-term trading, this also applies, but very superficially). Knowing what the trading session is now will be useful to you in the following cases:
When choosing the moment to enter the market. Once the direction of movement has already been determined, a professional does not open a deal, but first looks for the most profitable point. Sometimes it seems that the market stops, but often this happens only because the time is not active (the exceptions are “dead” periods in the market, which usually occur before very important news and some time after it, a moment of indecision and uncertainty).
Sharp price movements of 50 to 80 points to one side or the other. If your goal is not a multi-month goal, but limited to 300-500 points, these fluctuations may concern you. Especially if you’re already close to closing the deal. Then the doubts arise: maybe a reversal is imminent? Or in a situation where, on the contrary, you have just entered the market and hit at the time of a sharp drop. When your forecast is professional enough, understanding that this is just a very active trading session allows you not to worry about sharp spikes in price. There is nothing strange here: in medium or long term trades, these movements are a common noise in the market.
Trading and trading sessions: should you pay attention to time? 2But understanding the activity and calm of the sessions is much more important for those who prefer short-term (intraday) trading and scalping. These people just need to keep track of time. Specific examples of where and how this is useful are listed below.
Strategy test. When we spend time testing the effectiveness of an approach, we need precision. The tester is a great thing, but it doesn’t take into account what time of day it was at the time of each trade. For example, you are trading M15-M30 using a strategy that works well in a trend, and it is very important to you that there is a trend. On such a scale, in the active period of the day – a trend, and in the Pacific session – flat. So far the errors in the performance tests.
Enter the market at the right time. In this case, we are talking about the same situations as described above. If your strategy requires a calm market and is designed to be flat, if it is short-term, lasting no more than a few hours, if risk needs to be minimized, trading in a calm period is right for you. If, on the other hand, you desperately need a trend (this is required by the rules of the strategy or this is your personal preference), then active sessions are suitable for scalping and day trading.
Compliance with the rules of the strategy. Some market forecasting methods do not take into account the time of day; at least the operators forget about this. For example, sometimes two requirements are imposed at the same time: enter the market immediately after the appearance of the necessary signal, but close the deal if the price does not go in the right direction in the next two hours, but hesitates. Sometimes the signal appears before night and then nothing happens for several hours. If a trader has completely forgotten that it is now a sleepy peaceful session, he will close the deal without expecting profit from him. But he will exactly fulfill all the conditions of the tactic …
These are just the basics where you may need to understand the reasons for excessive market activity or, conversely, its absence. In general, you will find the answers you need more than once if you have a chart of trading sessions in front of your eyes. And over time, and pretty quickly, you’ll remember your schedule. The main thing is to immediately adjust the time to your time zone so that there are no errors.
The success and failure of traders are made up of those “little things”. Someone tries to understand the market as fully as possible, others limit themselves to superficial analysis. And everyone will get results according to their attitude towards work, either today or in a few weeks. There is no other way here. Forex is not roulette, no matter what skeptics tell you