This article is amongst the series of articles written about scalping methods. For complete guidance, you must read the previous articles in forex scalping techniques guidance series.
To get successful scalping results, you must perform your activities in a preferred time period according to your strategy. Some scalpers choose directionless and uneven markets using their strategies while others prefer for highly volatile and liquid markets with clear direction. Choice of market is only the trader’s own will and preference but there are clear difference amongst the market environments and successful strategies for both types. In the following lines, vital time periods for performing scalping trades will be discussed which can yield good profits.
Moreover, a scalper also has full control of leaving a trade position if he thinks he is no longer in chance of getting profits by holding it. There must be good money management, risk avoidance and good trading style in order to gain profitable results. Generally, scalpers leave their positions in quick time period for good consistency; there is still no restriction in changing this style and merging it with other trading styles.
Generally, holding positions in volatile periods of market is more beneficial for the scalper. So, if you are a scalper and you want to hold positions for a longer time during volatile changes in market, there is no rule that will restrict you from doing so as scalper.
In the following lines, times are given according to New York time (EST).
In this time period, there are variable conditions in European market as traders are getting ready to market openings at 8:00 am of New York Market. As there are new releases and option expires from this market in this duration and as statistical releases in the European session have already been released before at 4 am are all absorbed by 8:00am, many traders will just wait and prepare their trading strategies before players from North America enter the trade. The Frankfurt and London markets have this same opening time but as trading desks lessen liquidity is also reduced.
Scalpers who prefer variable environment find such market conditions excellent for using their skills and improving their techniques in this time period. Since there are sharp changes in market, scalper must use strategies which manipulate small changes in market rates to get successful profits. However, you must remember that in some situations you may not be able to judge price correctly and effects can be much more than the anticipated effects.
This time duration is much more volatile than the time period of last 2 closing hours of North American market which closes at 7:00am.Another thing to keep in mind is that in some cases, the pre-news release can make the market more volatile and you can assume a significant price change in time period of 1.5 hours after release at 8:30.
All New York, Frankfurt and London markets are opened in this time period and there are many key news releases with also option expires taking place. This can be taken as most liquid time period with high volatility as compared to rest of the day time. Using correct strategies can lead to good profits in this time for scalpers.
Micro-trends are very active in this time which means there are quick and sharp changes as there are many market stirs as frequent news and events occur frequently in this time. In order to take full advantage of these changes, scalper must use a good technical approach through which he can best use the situations and exploit the market conditions. The details of technical knowledge of trend scalping will be discussed later; it should be kept in mind that it is very important to create positions and improving profits for this trending market.
In scalping, there are rapid openings of positions and closings. However, the rapid changes in market may cause big loosing situations in which loosing amount may erase the entire winning amount gained from winning situations. So scalper must give special attention to the trades and if you are trading when there are sharp changes in market you must take full advantage of it.
There are two time periods in this phase. In time frame 3:00pm-5:00pm several U.S. banks are still open. However, they are moving towards the closing phase in this time. And the time frame 5:00pm-7:00pm, there is complete silence in the trading activities. All markets get closed at this time and trading activity is very slow. This time is best for scalper who prefers quite and slow moving market with lowest risk level and he can effectively make good profits from directionless and small changes in market. During this time frame, scalping strategies can used both manually or through automated systems.