Weekend Trading – Opening Hours, Markets And Strategy

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Intraday Trading Strategy: How to Trade the Opening Range

Intraday Trading Strategy: How to Trade the Opening Range

The opening range strategy is used by futures traders all over the world. It was made famous by pit traders who have transitioned to the screen.
The premise of the opening range strategy is finding a timeframe that suits your style of trading and getting long above the top of the opening range and getting short below the bottom of the opening range. Simple enough?

Markets open up for the US session every day at 9:30AM EST.

Most futures markets actually trade around the clock. However, you only want to watch and trade during the most active market hours. Find out what the best futures trading hours are and which to avoid here.

The intraday opening range is most commonly defined as any timeframe within the first 10-minutes of the US open.

At TRADEPRO Academy we stick to a 30-second opening range or a 5-minute opening range. If you hold positions longer, with larger stops and take profits, you can move the scale-up.

10-minutes, 15-minutes even 30-minutes.

Also, at 10 AM EST we have a lot of important economic news releases, which increases volatility and volume.

This means the intraday trading opening range is between 9:30 AM and 10:30AM EST. Any timeframe within.

If you hold trades long and are a swing trader, you can wait for the first hour to finish to make a move.

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As a day trader, the initial 15 minutes to 30 minutes are often enough to sense the direction of the market.

Intraday Trading Strategy – How to Define the Opening Range

As a day trader, you want to look at the opening range as anything within the first 15 minutes. If you plan to be a day trader with a few hours holding period, you can look at the first 30 minutes.

Swing traders will definitely want to wait out the initial balance of volume. The initial balance ends 60 minutes into the US session at 10:30AM EST.

What you want to do is identify the high of the opening range and the low. This can be done simply on Sierra Chart.

There is a study on Sierra Chart called the “High/Low for Time Period-Extended”.

In which you set the start time to 9:30:00 and the end time, the end of your opening range, for our example we’ll use 5-minutes. So the end time is 9:34:59.

The trade is simple, once the price action breaks above the high of the opening range, get long. If price breaks below, get short.

You don’t want to do this as soon as it breaks, but you would start to qualify a trade based on your entry criteria. I rely very heavily on order flow and correlation. Read why market correlation is the best trading indicator.

There are some breakout traders that buy 1-tick above the opening range (buy stop) and sell 1-tick below the opening range (sell stop).

Be cautious with this strategy especially in low volatility markets, such as in the summer.

There is a risk of getting stopped out on the trade before the actual break, that is why those breakout traders use a very tight stop of 1-2 ticks.

the higher probability trade lies in the patience of the break and the pullback into the area.

Intraday Trading Strategy – How to Trade the Opening Range

Here is an example of the 5-minutes opening range in the SP500 futures:

  • this is a 5 minute chart, so we are looking for the prices after the first few candles (tick chart)
  • The 5M opening range high is 2,880.25
  • The 15M opening range low is 2,875.75
  • at 9:35 price broke above the opening range
  • Bullish trade was possible on retracement back to 5M high
  • Stop loss placement is when price returns back in the range, or at 2,878.75 in this example

In the opening range trade strategy, especially in volatile markets, you may not get the full pull back and rotations. You may have to be a little more agressive when it does present you will a pullback opportunity.

Notice in the example below we do get stagnation and a slight pullback in the third candle break, this requires traders to get in just before the retest of the opening range high.

As long as you envision where you stop is, somewhere within the opening range. Not just a tick, but a point even, then it is worth a shot.

Remember in the markets, nothing is a guarantee, you’re given the opportunity. Some opportunity is higher probability than others.

As we can see from the chart below, the trade provided you ample opportunity to make a profit on the upside:

  • Assuming you took the long at 2,880 and trailed your stop-loss order to 2,887.25
  • You would have still been in the position and trailing!
  • For one contract on ES, at 2887.25 that’s USD $362.25 AND STILL TRAILING!
  • The trade required only $400 margin to open

I bet you’re all riddled with questions, why that trailing stop? Why not take a profit?

The answer to both is simpler than you may think. Notice the slight pullback and peak that we experience at that level. At 2887.25, that is where price slightly dipped.

If we get below that level, that is a change in the bullish market structure. If we get below that again, you don’t want this long anymore.

At this point, you are looking for a better level for the long, or even switch to the short side.

On another note, why not take the profit?

If you have one lot, you should! If you have multiples on, the rest of the contract size can be trailed higher! Take as much as the market gives you.

On the break above the overnight high, the next trailing stop level is 2888.00, why? That’s where the next peak lower is, and so on.

Intraday Trading Strategy – How to Avoid Head-fakes in the Opening Range Strategy

The example above was a great one of the profit potential when it works.

However, the ES futures are very prone to head fakes and stop-loss runs in the early part of the session.

What you want to do is to make sure that when an opening range is breached, you still wait for a good opportunity to get into the trade.

Don’t rush the process.

Just because you have a trade idea, it doesn’t mean that it’s worth the risk.

Create your checklist, know your strategy, and be patient.

Your opportunity will come.

Most losses can be reduced and outright eliminated with just a little more patience and discipline.

That’s the secret to trading.

Let us know how you like this intraday trading strategy, and how you tweak it to fit your style.

Good luck and good trading.

If you want to join us for weekly live analysis, trade ideas and daily market updates – you should sign up for one of our TRADEPRO Subscriptions here.

The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.

The Best Forex Trading Hours

The optimal time to trade the forex (foreign exchange) market is when it’s at its most active levels—that’s when trading spreads (the differences between bid prices and the ask prices) tend to narrow. In these situations, less money goes to the market makers facilitating currency trades, leaving more money for the traders to pocket personally.   

The 4 Major Forex Exchanges

The four major forex exchanges are located in London, New York, Sydney, and Tokyo.   Forex traders need to commit their hours to memory, with particular attention paid to the hours when two exchanges overlap. When more than one exchange is simultaneously open, this not only increases trading volume, it also adds volatility (the extent and rate at which equity or currency prices change). Both of these factors can benefit forex traders. 

This may seem paradoxical. After all, investors generally fear market volatility. In the forex game, however, greater volatility translates to greater payoff opportunities. 

Worldwide Forex Markets Hours

The forex has 15 independent worldwide exchanges, open weekly from Monday through Friday. Each exchange has unique trading hours, but from the average trader’s perspective, the four most important time windows are as follows (all times are shown in Eastern Standard Time):

  • London: 3 a.m. to 12 p.m. (noon)
  • New York: 8 a.m. to 5 p.m.
  • Sydney: 5 p.m. to 2 a.m. (midnight)
  • Tokyo: 7 p.m. to 4 a.m.

While each exchange functions independently, they all trade the same currencies.   Consequently, when two exchanges are open, the number of traders actively buying and selling a given currency dramatically increases.   The bids and asks in one forex market exchange immediately impact bids and asks on all other open exchanges, reducing market spreads and increasing volatility. This is certainly the case in the following windows:

  • 8 a.m. to noon, with both New York and London exchanges open
  • 7 p.m. to 2 a.m., with both Tokyo and Sydney exchanges open
  • 3 a.m. to 4 a.m., with both Tokyo and London exchanges open

The most favorable trading time is the 8 a.m. to noon overlap of New York and London exchanges. These two trading centers account for more than 50% of all forex trades. On the flipside, from 5 p.m. to 6 p.m., trading mostly happens in the Singapore and Sydney exchanges, where there is far less volume than during the London/New York window.

There can be exceptions, and the expected trading volume is based on the assumption that no major news developments come to light. Political or military crises that develop during otherwise slow trading hours could potentially spike volatility and trading volume, making it a favorable time to trade.

High-Volume Forex Trading Hours Don’t Always Translate to Profits

Forex traders should proceed with caution because currency trades often involve high leverage rates of 1000 to 1. While this ratio offers tantalizing profit opportunities, it comes with an investor’s risk of losing an entire investment in a single trade. A 2020 Citibank study found that just 30% of retail forex traders break even or better. Tellingly, 84% of those polled believe they can make money in the forex market.   The chief takeaway is that new forex investors should open accounts with firms that offer demo platforms, which let them make mock forex trades and tally imaginary gains and losses. Once investors learn the ropes and become seasoned enough, then they can confidently begin making real trades.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.

Why the Forex Market Is Open 24 Hours a Day

The forex market is the largest financial market in the world. Trading in the forex is not done at one central location but is conducted between participants by phone and electronic communication networks (ECNs) in various markets around the world.

The market is open 24 hours a day in different parts of the world, from 5 p.m. EST on Sunday until 4 p.m. EST on Friday. At any point in time, there is at least one market open, and there are a few hours of overlap between one region’s market closing and another opening. The international scope of currency trading means there are always traders across the globe who are making and meeting demands for a particular currency.

Currency is also needed around the world for international trade, by central banks, and global businesses. Central banks have particularly relied on foreign-exchange markets since 1971 when fixed-currency markets ceased to exist because the gold standard was dropped. Since that time, most international currencies have been “floated” rather than tied to the value of gold.

Key Takeaways

  • The forex market is open 24 hours a day in different parts of the world, from 5 p.m. EST on Sunday until 4 p.m. EST on Friday.
  • The ability of the forex to trade over a 24-hour period is due in part to different international time zones.
  • Forex trading opens daily with the Australasia area, followed by Europe, and then North America.
  • As one region’s markets close another opens, or has already opened, and continues to trade in the forex market.

The Reasoning Behind Around-the-Clock Trading

The ability of the forex market to trade over a 24-hour period is due in part to different international time zones, and the fact trades are conducted over a network of computers rather than any one physical exchange that closes at a particular time. For instance, when you hear that the U.S. dollar closed at a certain rate, it simply means that was the rate at market close in New York. That is because currency continues to be traded around the world long after New York’s close, unlike securities.

Securities such as domestic stocks, bonds, and commodities are not as relevant or in need on the international stage and thus are not required to trade beyond the standard business day in the issuer’s home country. The demand for trade in these markets is not high enough to justify opening 24 hours a day due to the focus on the domestic market, meaning that it is likely that few shares would be traded at 3 a.m. in the U.S.

1.5 trillion

The amount that is traded on the forex market each day.

Europe is comprised of major financial centers such as London, Paris, Frankfurt, and Zurich. Banks, institutions, and dealers all conduct forex trading for themselves and their clients in each of these markets.

Every day of forex trading starts with the opening of the Australasia area, followed by Europe, and then North America. As one region’s markets close another opens, or has already opened, and continues to trade in the forex market. These markets will often overlap for a few hours, providing some of the most active periods of forex trading.

For example, if a forex trader in Australia wakes up at 3 a.m. and wants to trade currency, they will be unable to do so through forex dealers located in Australasia, but they can make as many trades as they want through European or North American dealers.

The forex market can be split into three main regions: Australasia, Europe, and North America, with several major financial centers within each of these main areas.

Understanding Forex Market Hours

International currency markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, as well as retail forex brokers and investors around the world. Because this market operates in multiple time zones, it can be accessed at any time except for the weekend break.

The international currency market isn’t dominated by a single market exchange but involves a global network of exchanges and brokers around the world. Forex trading hours are based on when trading is open in each participating country. While the timezones overlap, the generally accepted timezone for each region are as follows:

  • New York 8am to 5pm EST (1pm to 10pm UTC)
    Tokyo 7pm to 4am EST (12am to 9am UTC)
    Sydney 5pm to 2am EST (10pm to 7am UTC)
    London 3am to 12 noon EST (8pm to 5pm UTC)

The two busiest time zones are London and New York. The period when these two trading sessions overlap (London afternoon and New York morning) is the busiest period and accounts for the majority of volume traded in the $5 trillion a day market. It is during this period where the Reuters/WMR benchmark spot foreign exchange rate is determined. The rate, which is set at 4pm London time is used for daily valuation and pricing for many money managers and pension funds.

While the forex market is a 24-hour market, some currencies in several emerging markets, are not traded 24 hours a day. The seven most traded currencies in the world are the U.S. dollar, the Euro, the Japanese yen, the British pound, and the Australian dollar, the Canadian Dollar, and the New Zealand Dollar, all of which are traded continuously while the forex market is open.

Speculators typically trade in pairs crossing between these seven currencies from any country in the world, though they favor times with heavier volume. When trading volumes are heaviest forex brokers will provide tighter spreads (bid and ask prices closer to each other), which reduces transaction costs for traders. Likewise institutional traders also favor times with higher trading volume, though they may accept wider spreads for the opportunity to trade as early as possible in reaction to new information they have.

Despite the highly decentralized nature of the forex market it remains an efficient transfer mechanism for all participants and a far-reaching access mechanism for those who wish to speculate from anywhere on the globe.

Price Swings in the FOREX

Economic and political instability and infinite other perpetual changes also affect the currency markets. Central banks seek to stabilize their country’s currency by trading it on the open market and keeping a relative value compared to other world currencies. Businesses that operate in multiple countries seek to mitigate the risks of doing business in foreign markets and hedge currency risk.

Businesses enter into currency swaps to hedge risk, which gives them the right but not necessarily the obligation to buy a set amount of foreign currency for a set price in another currency at a date in the future. They are limiting their exposure to large fluctuations in currency valuations through this strategy.

The Bottom Line

Currency is a global necessity for central banks, international trade, and global businesses, and therefore requires a 24-hour market to satisfy the need for transactions across various time zones. In sum, it’s safe to assume that there is no point during the trading week that a participant in the forex market will not potentially be able to make a currency trade.

[Note: If you’re interested in day trading in the forex market, Investopedia’s Forex Trading For Beginners course provides an excellent introduction to day trading to help you get started on the right foot.]

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