Instruments, Sessions, Time Frames

Trading Hours and Time Frames

The Forex market is open 24 hours a day except weekends (it’s closed from 22:00 GMT on Friday until 22:00 GMT on Sunday). It doesn’t matter if you’re working or retired a homemaker or a student; you can always find trading times that work for you.

There are many part-time traders who are able to use the long hours of market activity to their advantage, by trading when they are not at work. The trading hours of the Forex market also benefit long-term investors because they are able to enter and exit their positions whenever the market dictates, as opposed to waiting for the markets to open, such as they would if trading the FTSE or DOW

Session Open Times are the Best Times for Day Traders

If you can manage to keep a routine, (and it is very important to do so) the best times to trade is when there is the highest amount of volatility expected. In my experience, session open times are the best times to trade this strategy - I call them the “Chaos Influx Points” (Chaos is basically new Incoming information).

The more new incoming information (that is Chaos), such as important news releases, the greater the chances of price moving in a certain direction. Just 1-2 Hrs per session is usually enough to successfully trade the session opens but you may find me there at my screen from 7am GMT to 5pm GMT, but hey that’s just me, the "Chart-a-holic". 

woman in white shirt showing frustration

Whilst there can be so much movement during the session opens, a lot can happen in between opening times as well. I have seen dead open session and alive mid-session hours as well. I have seen markets move 100 pips in a matter of minutes during unimaginable hours. Having said that, I’ll add that more often than not, the markets move the most during London and New York Sessions, followed by the Tokyo Session.

The above is just a guideline. Call me a "Chart-a-holic" or "Trade Junkie" but I’m always on the charts and I love it. Trading can be a lonely activity, but not for me: I have my kids nearby and my best friends, the AIMSters, in our trading room and in the forum.

We may crack jokes all day long when there is no market activity and no setups but when there is a Setup we may pounce on it like a predictor snatches its prey.  Trading is a great fun activity. I like trading so much that when we go for holidays, I may choose a place where I can trade as well – but that’s just me, trading or thinking about trading whenever I get the chance. At the time of writing this, I am sat in the foothills of the Himalayas. I just took a deep breath, in this serene calm natural environment with my laptop in my lap.

Forex Open and Close Times
Following is a table of Forex market open and close times.

Forex Market Hours

Region City Open (GMT) Close (GMT) Open (EST) Close (EST)
Europe London 8:00 am 5:00 pm 3:00 am 12:00 noon
Frankfurt 7:00 am 4:00 pm 2:00 am 11:00 am
America New York 1:00 pm 10:00 pm 8:00 am 5:00 pm
Chicago 2:00 pm 11:00 pm 9:00 am 6:00 pm
Asia Tokyo midnight 9:00 am 7:00 pm 4:00 am
Hong Kong 1:00 am 10:00 am 8:00 pm 5:00 am
Pacific Sydney 10:00 pm 7:00 am 5:00 pm 2:00 am
Wellington 10:00 pm 6:00 am 5:00 pm 1:00 am

What if I Can’t Watch The Screen All-Day?

Many people say: “I don’t want to watch screen all day” - well, that’s totally fine. You can still catch some decent moves by trading just the session open times. If you see a Setup, trade it, if you don’t see a Setup just come back later. Day Trading does mean you have to be on the screen a lot but it does not necessarily mean you have to be on the screens all day long; on the contrary, you get to trade a complete wave cycle within just an hour or so and leave the charts for the rest of the day. Or you may decide to trade the hourly, four hourly or daily charts. I love the hourly charts. In fact, as of March 2022, my focus is entirely on trading off the hourly time frame.

Let us now look at what chart time frames, forex pairs or markets, that we like to use to trade here at the
AIMS Stress Free Trading Community.

However note that at this stage of your learning or this course, you need not worry about deciding which time frame you should be using. Don't worry about this too much for now as you will make these decisions when you are ready to put it all together into a trading plan.

Instruments, Sessions, Time Frames

Let's have a look at a few of the options.

Forex Swing Trading Session Times: 

Start Time: Traders in the USA or Europe Time Zones can Start around Europe Open. The US traders can choose to start at their morning session. Some traders like to trade the Asian session too. 

Instrument to Trade:  Forex Majors and a Few hot crosses. 

The major pairs are the four most heavily traded currency pairs in the forex (FX) market. The four major pairs at present are the EUR/USD, USD/JPY, GBP/USD, USD/CHF. These four major currency pairs are deliverable currencies and are part of the Group of Ten (G10) currency group.

The choice of currency pairs will depending ultimately on the choice of time frame and strategy you choose. If you choose to day trade, then you will trading the 1 or the 5 minute time frame. In that case,  perhaps watching 1-3 markets will be enough. However if you choose to swing trade, then perhaps you may choose to trade on the hourly  or 4 hourly time frame. In the case of swing trading perhaps upto 4,6 or even upto 12 forex pairs will do the trick.

The other option is to trade any combination of pairs on a time frame of your choice.

  • There is no need to display two charts for higher time frames but it’s always best to have a quick look at the higher time frames to get the feel of the overall trend.

Swing Trading Time Frames: D1/H4/H1 

Swing trading can be done on any of these time frames. Some traders like to call it a swing trade if they stay within a trade during the times when the market/price pulls back or corrects itself. Others like to define swing trading as the chart time frame. They say that if you trade the hourly, 4hourly of even daily time frame, then you are swing trading.

  • Trade a selection of 8-14 pairs on H1 or H4 time frames.
    • EUR/USD, GBP/USD, AUD/USD, EUR/JPY, USD/CHF, USD/JPY, USD/CAD, EUR/GBP, GBP/JPY, GBP/CHF, EUR/CHF, NZD/USD, Gold, Brent (Oil), Silver, Dax etc

Day Trading Time Frame: H1/M15/M5/M1 

Most day traders will trade the five or the one minute time frame. In forex, you'll come across many day traders who would trade the 5 or the 15 minute time frame. The one minute time frame is not always good for trading in the forex world. The 5, 10 or 15 minute time frames are better for day trading.

  • Trade a selection of 3-6 pairs
    • EUR/USD, GBP/USD, AUD/USD, EUR/JPY, USD/CHF, USD/JPY, DAX40, Dow, Nasdaq100,

 

Day Trading The Europe and US Sessions

We like to trade during the first 2 hours of the London Session. The instrument of choice has been DAX30 (now DAX40) since 2014 onwards. We choose this market because it offers plenty of volatility and trading opportunities during the open times.

The London Session

Start Time: London Open which is 8 am UK or 3 am New York time. 

Instrument to Trade: The German Index DAX40, (formerly dax30). Some traders may look at the FTSE100, US100 (nasdaq), US30 (dow) as well. But often, the spread is larger before their respective open sessions.

Analysis Time Frame: The Hourly Time Frame (The Big Picture) 

Trading Time Frame: M1 and/or M5. 

 

The US Session

Start Time: US Open that is 9.30 am New York or 2.30 pm UK. That is the New York Equities or the Stock Exchange Opening Bell. If there are some major news then we shall look at the market at 1.30 pm UK or 8.30 am New York. 

Instrument to Trade: US30 or NAS100 (whichever is moving smoothly). Trade one or the other. Do not trade both. 

Popular Day Trading Time Frames:  The most popular day trading chart time frames are perhaps the one or the 5 minute time frame also known as the M1 or M5. 

For the purpose of the forex trading strategy that you are about to learn, it can be said that:

  • We Trade M1 in the direction of M5 or
  • We Trade M5 with entries on M1.

There was a time when I clogged my mind with worrying too much about what happens to an array of things.

  • I was worried about correlation.
  • I could not bear seeing missed opportunities on other pairs.
  • I kept checking several different indicators etc

Then I learned that:

The market has a pulse

So, I now believe that when the market moves all the pairs move. This is especially true for intraday trading.

It is a interesting fact that when the market pulse gets stronger all the pairs move in the same direction based on their respective correlation but they may not all “Setup” at the same time.

In general and specifically for a new traders I suggest that trading only one pair is enough for learning and training and making good money in the Forex markets. I have traders in my trading room who follow this method and make regular profits. One of my favourite day  traders is Emma, she trades with me on a daily basis in our discord server. She has always looked at only one market, (dax40) during the london session. Yet, she captures very profitable trades several time a day. Yes, there are days where there are no trades but hardly any week goes by without a trade.

No one likes to miss trading opportunities on other pairs, though I have found through experience, that trading only one pair, on M1 and/or M5, is the best way forward. Later when you’re proficient you may add more pairs depending on your comfort zone, your personality, your lifestyle etc.

Some traders might be concerned about the number of Setups that the system might generate whilst trading just the one or two markets. Rest assured that we get numerous Setups per session every day. We are usually spoilt for choice. You can always visit the community form and check some trading journals. You will see that traders report getting in a trade or two nearly every day.  Below you see some trades that Emma posted into her journal. You can see she got 1-3 trades every day of the week.

Emma Journals shows plenty of trades everyday

 

It is true that we prefer to trade this strategy on M1 and M5 and our favourite trading instruments are DAX30, US30 and US100 and that the system is tweaked specifically for such.

However, this certainly does not mean that the strategy cannot be applied to other currencies, markets and/or time frames. On the contrary, it can be applied to any market, currency and time frame available anywhere.

We have also applied the Setup strategy to trading the Stocks and Cryptocurrency markets with huge success.

Find Your Comfort zone

You will find that many traders in the forum have found their own comfort zone. It is very important that you feel comfortable with the time frame you have chosen. We present the strategy here mainly on the M1/M5 charts and will give you ideas on how to implement the same concept to higher time frames as well.

The market has a pulse and when it beats, everything moves.

"Nothing happens until something moves." Albert Einstein

Faster Time Frames and Patience

Trading on Faster time frames such as M1 and M5 is our favourite trading style . Some might call it scalping but I beg to disagree. There are several trading styles such as Scalping, Day Trading, Swing Trading, and position trading etc.

On our favourite trading platform i.e. MT4 M1  is the shortest or the fastest time frame available for trading. This then is the shortest term trading style available to all MT4 users. However, you can use other tools to create the 5 or 10 seconds charts as well. I have explained this in one of the lessons later in the course.

A scalper may make trades that are active for the least amount of time, but in all other respects scalping is no different from the other trading styles. Our M1 strategy is also no different.

One of the perceived differences between M1/M5 and the longer term trading styles is the amount of time between trades. Trading M1/M5 is often and incorrectly assumed to make many trades very quickly, but the reality is that scalping often requires waiting just as long as H1 Trading, sometimes as long as swing trading, and theoretically even as long as position trading.

The myth about Trading M1

One of the reasons that new traders are often attracted to M1/M5 is the popular belief that trading on faster time frames means many small trades in rapid succession, with very little time spent without an active trade. As a result, many new traders approach it with an expectation of making a lot of trades very quickly not to mention the expectation of making a lot of profit very quickly, and consequently, they perform their trading incorrectly.

Our M1/M5 strategy is the shortest term trading style, and therefore does tend to make smaller trades (i.e. trades with smaller targets and stop losses), but the frequency of the trades does not necessarily increase accordingly. Yes, this concept is very important to understand. We Trade only when the market conditions are right for trading and that we know by following our Strategy Rules and Guidelines.

Trading M1 Requires Patience

Trading our M1/M5 strategy therefore requires a lot more patience than many new traders expect or are prepared for. It definitely requires as much patience as Trading M5 or M15, sometimes requires as much patience as Trading H1/H4, and in theory could require as much patience as position trading (i.e. waiting Days for the next trade). Professional traders will wait as long as necessary for their next trade, even if that means waiting several days for a trade that then lasts only five minutes.

Shorter Time Frames vs Higher Time Frames

If you have a large account, you might be able to earn good living using time frames that require little chart time, e.g. the daily charts would require just 15 minutes of trading per day. The 4hr time frame would require that you check your charts at most every 4 hrs. or just once or twice per day. If you trade of the Daily Chart, (end of day) you cannot do anything until the next bar is printed so you’ll have to wait until the next day (or close of the daily candle) to take a decision.

Likewise for H4 it would take four hours for the candle to close before you can make a decision, giving you ample time in between.  For anything less than M30 you need to stay focused and remain at your computer for a good amount of time. Don’t worry though, we have made this very simple and stress free.

 

Risk Less – Make More

Would you like to risk less but still make more than you risked? Trading higher time frames require relatively large accounts. However you can still trade the Daily and Hourly charts with as low as $5,000 account. But these days, you can get yourself $200,000 funded account and trade for a prop firm. Money is made with money. If you can start with $200K then why spend your life on a small 5K account?

If your account is too small and want to trade Daily charts you may end up taking trades with 3-5% risk per trade, which increases your return per trade but it means you have a higher risk of losing your account faster, if things are not going your way for a certain period of time.

Alternatively you can enter the time machine, come in to the world of M5 and M1; speed up your life. Let me give you a comparison: if anything above M5 is the atomic world, M1 is just like the sub-atomic world. Let’s tap in to the Quantum Field of M1 trading. Joking apart, the time frame choice has a lot to day with your personality and lifestyle. No matter how much love the one minute time frame, if you work full time during those hours, you won't be able to trade on that time frame. In general, there are more winning traders on the higher time frames than on the faster lower time frames. Period. I speak from my experience of trading with and coaching traders for the last 10+ years.

RISK to REWARD Ratio

In trading it is all about risk to reward ratio. If you can catch 2-3 trades with a 1:3 (risk to reward ratio) on a given time frame per week, you will make a very good living off trading.

You may do that on the Swing Time Frames or you may do this on the Day Trading time frames. It's all up to you and how you like to trade. Let's have a look at a couple of chart examples.

In the picture below, a buy (long) trade was taken on daily time frame. It took 25 working days from entry to exit. Using a stop loss of 300 pips while risking 1% of your account, you would have netted 2.66% on this trade - a good risk-reward ratio indeed, don’t you think?

A eurusd chart of a risk reward trade example

Comparatively, if you took a trade using our Setup on M1, using stop loss and position sizing accordingly, risking no more than 1% of your account it might, give you 1:1 to 1:10 account growth (or more using advanced techniques). The only difference is that the daily trade would take a few weeks, whereas the M1 trade would take just a few minutes.

A risk reward of 1:2.6 on the one minute chart of eurusd

In the picture above, a similar kind of trade was taken, only this time it is a sell (short) trade on a much smaller/faster time frame - the one-minute chart. The trade took roughly the same number of candles but in a fraction of the time, just 23 candles meaning only 23minutes.

What’s interesting is that you would have still grown your account by 2.66%, similar to the daily trade example, only this time it would have taken you less than half an hour. To raise your account the same percentage growth wise this is significantly quicker as compared to 25 days in the example above.

So,

Would you like to Significantly Grow your account within 3 years or 3 months?

Would you like to take advantage of trading 1440 candles daily or 148 candles yearly?

What would you like to do? The Choice is yours!

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