Suitable Timings For Scalping.

In scalping time plays a crucial role, so we cant neglect its importance. Some scalpers prefer choppy, directionless markets when utilizing this style, while others prefer to trade strongly directional, highly liquid and volatile markets. This choice is mostly a matter of personal preference, but the two kinds of markets do offer different environments where different strategies will bear greater profit. In this post we will not discuss the methods, but will consider the time periods when a particular approach is likely to bear the best results.

7:00-8:00 am

This is the time period when European markets often experience choppy conditions as traders prepare for the opening of the New York market at 8 am. Since there are option expiries and news releases in this time period, and statistical releases of the European session (which are released around 4 am) have already been absorbed, most traders choose to sit back and reconsider their strategies before North American players enter the forex game. The London and Frankfurt markets are both open at this time, but liquidity lessens as trading desks reduce gear.

This period is a more volatile version of the last two hours before the North American market close around 7 am. Let’s also note that sometimes the pre-news release volatility in the market can assume a directional character as prices rise or fall significantly but slowly over the one and a half hours preceding the 8:30 release. In spite of the directionality, the slow nature of the price movement can make scalping a favorable option over a buy-and-hold strategy in the period leading to the release. Triangles are common, and it is possible to scalp them by remaining in side the range implied by the triangle.

8:00-10:00 am

The best time of the day to apply Scalping strategy in Forex is the opening of London session. Starting at 8:00am GMT and till 9:00am GMT Forex market appears to be more predictable, there are less whipsaws, price movements are more defined.

The two major European currency pairs - EUR/USD and GBP/USD are the perfect target for morning Forex scalping.

The opening of the London trading session is always busy, it brings a lot of participants to the market. During the first trading hour a prevailing trend is established. Quite often it is a continuation of the initial trend before 8 am.

3:00-7:00 pm

This period can itself be divided into two separate phases. Between 3pm and 5pm, many banks in the U.S. are still open, but they are closing gradually as the day progresses. The period between 5 pm and 7 pm is the quietest part of the trading day. Almost all major markets are closed, and while trading is still continuing, activity is subdued significantly. This is the golden sixth of the scalper who prefers calm, and slow markets where small, directionless oscillations can be exploited with great effectiveness. During this one sixth of the trading day, scalping strategies can be employed both manually, and through automation by traders who seek rapid and low risk profits.

The first part between 3-5 pm is more suitable to scalpers who prefer some volatility in the markets in order to realize more sizable profits. On the other hand, since many banks in the U.S. are still open during this period, volatility and risk are somewhat higher than the following period. Between 5-7 pm, on the other hand, almost all major banks in the developed world are closed, and extremely choppy, quiet conditions prevail.

P.S: Throughout this post, all times are ET (New York time).