When I started, I would wake up at six or seven and be at my desk by 7.30, ready before the London session even opened. I thought being early was the right thing to do.
It was not. Every morning started with a loss. Once I understood the timing of the sessions, that stopped happening. Here is what I learned.
Key takeaways
London opens at 8am and New York opens at 1pm British Standard Time, and those opens are the most volatile part of the day.
At 8am the banks and hedge funds come in with massive volume and throw technical analysis out of the window.
Before 8am, review your journal, meditate and visualize instead of trading, ten minutes each.
Wait until about 8.30 when price stabilizes and technical analysis comes back into play, then look for your entry.
Stay out 30 minutes before and 30 minutes after each session open, and the same around major news.
If you are already in a trade before a red-folder event, widen your stop and cut your size to keep risk at 1 percent.
Why the London open is not your friend
The forex market has the same hours everywhere. There are three major sessions, London, New York and Asian, and I mostly trade London and New York.
London opens at 8am British Standard Time. That is when the banks and hedge funds are actively buying and selling, and it is the most volatile time of the day.
At the open there is no logic in price. Every technical analysis theory gets thrown out of the window because the big players move price where they want, on volume.
“In the forex market, you have to be late. When the London session starts at 8am, you should not be trading at all.”
What to do before the market opens
Being early does not mean sitting there placing trades. Use that 7.30 hour to prepare instead.
I recommend ten minutes reviewing your trading journal, looking at yesterday and the day before to see what you did right and wrong. Then ten minutes of meditation.
Then ten minutes of visualization. Picture your trades going well, and also picture them going terribly, so you are ready for both. Then wait.
Start at 8.30 and let them make their move
By 8.30 the banks and hedge funds have already made their move and price gains a little stability. Technical analysis starts working again.
London is the first session and the longest, so ideally you want a win here, or at worst a small loss. You get a big loss when you fight the banks at 8am.
If you enter around 10am, there is no need to panic about the New York open at 1pm. You can keep the position open. There will be some volatility at 1pm, but if you are already in profit it may go in your favor.
Handling major news events
Go to ForexFactory.com and look for the news with red boxes next to them. Those are the major events. Some days you get one, some days several.
If it is a multiple major news day, stay away. Price moves without logic on the releases and your technical analysis is not effective, so it becomes a gamble.
If you are in a trade with one major event coming, do not close it, manage it. Around 20 minutes before and after there is heavy movement and slippage, so widen your stop and reduce your position size to bring risk back to about 1 percent.
“A big loss is always the problem. A small loss is part of the process.”
Time your trades right, then compare prop firms and their conditions on Propvator to fund them.