Are Breakeven Stops Worth The Effort? If you are developing a trading system to trade intraday charts you might want to know when are the best times to day trade. This article is aimed at those who enjoy opening and closing a trade within a day. That is, those of you who are day traders that end the day with your trading trendiness indicator forex flat.
We’re going to hit a very basic but necessary edge that just may help you narrow down when you should be trading and when you should step aside. The first big obstacle you will have to overcome is slippage and commissions. Both of these can have a dramatic effect on your trading system. These effects can literally take a seemingly winning system and turn it into a loser. The second obstacle is the difficultly level in developing a system on smaller timeframes vs larger timeframes.
The smaller the timeframe the more difficult it is to develop a successful system. In other words, developing a system to trade on a 5-minute chart is more difficult than developing a system that trades on a daily bar. I did this by simply taking the high of a 60-minute bar and subtracted the low. This gave the range of ticks for that hour. By doing this I was hoping to answer the question, when is the market most actively moving? The premise being, a more active market equals a more tradable market.
P and the Euro futures markets broken down by the number of ticks they move per hour. In short, you can see both markets have two peeks in activity. First, the European open around 0200 central time and second, the U. P market there is also a short burst of volatility two hours before the U. I would consider this a more friendly environment to trend following systems.
If you are looking to extract ticks from the market with a trend following day trading system, these charts highlight the times with the most range. Trade the hour before the U. Trade the first two hours after the U. Trade the last two hours of the U.
Trade the first three hours of the European open. Trade the first four hours of the U. These results may suggest that focusing your trading activities on these times may be more productive than trading the other times. Why waste a lot of time attempting to extract dollars during the other times which have much lower volatility? Keep your cash and save it for the most productive times to trade. In my experience, knowing when not to trade is a critical skill to have. It could save you from making a lot of mistakes which means saving you a lot of money.