The importance of time in Price Action Trading

Here are my thoughts about being aware of the time while you are considering
entering/exiting a trade. Generally speaking, it is a good idea to be aware of the
time, so you know what to expect in terms of price action.
• Major news release - is obviously important. Many times, even though the
news may be good or bad for your currency of interest, the market will not
respond in the way you think it will. It always a good idea to wait “until the
dust settles”. For super news events like Bank interest announcements and
NFP the best that one can do is not have any open positions during such
events.
• Session close time – The open and close of London and New York sessions is
usually significant. These are times when the momentum in the market
increases and quick significant moves can happen. I pay special attention to
London close because traders are likely to close some positions, causing the
market to pull back. Be aware of this in your local time.
• Lunch break – of institutional traders does cause the market to slow down
as well. This is perhaps significant for traders who are scalping.
• End of the hour – Every hour, you will see a small hesitation/minor reversal
in price. If you are a swing trader, this will not affect you but again scalpers
will usually close their position just before the hour ends.
• End of month/End of quarter/ End of year are all significant too. This is
when fund managers are keen to close out some positions especially if
doing that will help them show a profitable period of trading.
• Be aware that the volume of trading drops significantly during 3pm-8pm
EST. This is the time that the European sessions have closed, the New York
session is approaching their close and the Asian markets have not yet
opened. Taking a trade during these hours is not a good idea.
• Fridays are not the best day to trade either. If you want to trade on this
day, please limit yourself to the London session only. After that session is
over, you are unlikely to find much volatility in the markets. Opening new
positions is also therefore not recommended.
• Pair selection – is also important. If I see a trade setup on USDCAD, I am not
going to open a position in the Asian session. Most major pairs are traded
all over the world, but USDCAD will not move much in the Asian session. If
in doubt, you can check out the history of volatility in sessions from your
trading platform.
• I live in the Eastern Time Zone (EST) and have noted that sometimes the
trend can change when the NY session closes. Some days when the Asian
session starts a few hours later, the market direction changes completely.
Bearing this in mind, I will often close my positions an hour or two before
the NY session closes.

The above are my personal thoughts based on over 10 years trading

experience. The intent is not to make any recommendations here. I am only
sharing to help you becoming more aware of these factors and for you to
factor them in based on your personality, trading style and risk appetite.
Good Luck in your trading!!

Ravi Madan