Overnight Trading Notes

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George Woods
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1 Overnight Trading Notes Overnight Trading (from September 29, 2016) Steve Perry There are three methods that Steve uses: 1. 6 AM/7AM Reversals Method (London Open) 2. Asian Range Method 3. 3 AM GMT Consolidation breakout 6 AM/7AM reversals method (London Open) GBP/USD chart [M1] 2500 bars provides more long term info Place a vertical line at the 7AM GMT of the previous day. If you ever get the market moving up quickly over a short period of time, it is very likely that it is going to fall during the day. Identified that most of the momentum was gathering from the previous day. The more extensive move happened before the London open from 6:00 to 6:45 AM GST. Took a buy trade exactly at the London Open (at 7 AM) then rode the 7 AM bar and then exited as it reversed. The shorted the rest of the evening. So you need to identify where is the larger portion of the London Open volatility. Typically people place their orders 15 minutes before the open, trying to get into a good position early, eager investors end up driving the price down earlier as a result. The same happens on news events. Place a stop loss just above resistance when shorting the market for this trade. Trade the USD/JPY during the Asian session; Trade the GBP/USD and EUR/USD during the London/NY sessions. Asian Range Method (perfect for west coast traders) When Asia moves the market in a certain way, it usually just wobbles they generally don t move very far, due to reduced liquidity. A lot of people get out of their positions at the various levels because they are common. The Asia session begins around 10 PM GMT and ends around 8 AM GMT. We stop it around 5 AM GMT, because we don t want to stay up that long. Most of the moves happen between 10 PM GMT and 5 AM GMT. Draw out a box showing the highs and lows of the Asian session. London ends around 4 PM GMT, but NY takes over around 12 PM GMT. Draw out a box between the high and the low of the London session. Then do the same for the New York session. (NY is not as important to know, because with this method, we are mainly trading the Asian and London sessions). 1

pips. So we know 75% of all trades are done in London. Method: 1.

2 So you can see that Asia had about 27 pips from top to bottom. London had a rise from bottom to top of 140 pips (Partly news event driven, but a typical range difference); New York had a range of 71 pips. So we know 75% of all trades are done in London. Method: 1. Before you go to bed, establish what is the high and low of the Asian market on an [M15] chart 2. Confirm the entry by looking at the past to see what is the support and resistance from the past and then set your buy stop order above that, if it is higher than the Asian market high. 2

3 3. Determine the price cycle, to help us determine the Take Profit target. Go to the past history and put boxes around the Asian market (low and high range), then calculate the profit made from the breakout to the end of the London range. 4. Put your TP at previous support. New York frequently reverses the move that occurred in the London session. So take whatever profit you have by the end of the London session if it hasn t already triggered your TP stop. 5. Find out what the price cycle is every night (average move). For calculating the price cycle, omit unusual sessions where there was a news event that made a huge move. Generally you want to calculate the price cycle over the last month (30 days) to get a realistic idea. In this example the price cycle works out to 32 pips. So you could set your target TP stop at pips. 6. Take a look at how many times the market breaks out regardless of your stop loss. If this is the characteristic of the Asian trade, do we need to risk a lot of money? It typically doesn t get anywhere near the stop loss. Can look at the past history to see what the size of the losses (pullbacks) would have been this helps you to determine how much your Stop Loss needs to be to prevent being whipsawed. Consider using a pip stop loss (much less than the 32 pips target.) That should be safe enough. It is important to know what is your drawdown how far is your bank account going to go down while your trade is waiting to be profitable. 7. Most likely only one of your trades will have triggered. When you wake up, book your profits and close the untriggered trade (pending order). 8. If you use trailing stops, set your initial stop loss higher (25 pips). 3 AM GMT Consolidation Breakout method (especially good for west coast traders) This is at 11 PM EST (8 PM PST) This method is very consistent in terms of win ratios. We are capturing all the early traders buying the GBP at bargain prices. Once the early traders get in before the London Open, they drive the price up. You want to set up buy and sell stops ahead of time, to catch the breakout in either direction. This method is designed to last just until the London Open, so after 3 or 4 hours you are out of the trade. Method: 1. Look at GBP/USD chart [M5] 2500 bars 2. Lineup a couple of vertical lines on 3 AM GMT for the previous days. This is the time that the GBP and USD typically consolidate at this time before taking a reversal. 3. Then line up the vertical lines for the 7 AM London Open. 4. Place Buy stop order above resistance 5. Place Sell stop order right below support 6. You ll get triggered in right away within the first 10 minutes. The trade will pullback a few pips then go into the reversal for the rest of the time period. The reversal lasts until the London Open. 3

So typically, it will breakout in the opposite direction. Let s look at the previous night: At 3AM, it was at a low.

4 Examples: Let s put a rectangle around the consolidation that occurred at last night s 3 AM, then notice how far the reversal went from the breakout. This one is over 40 pips. Look at what the market was doing prior to the consolidation: In this case, it was moving up. So typically, it will breakout in the opposite direction. Let s look at the previous night: At 3AM, it was at a low. Prior to that time, it was falling. So, after 3 AM, you ll be looking to buy for the rest of the day. You can also put in a sell stop right below the low at 3 AM in case the up move doesn t work out. 4

5 Look at previous days to see the average drawdown, so you know what to set as your stop loss and target in pips. General Rules: If the market forms a new high at 3 AM GMT, generally you are going to want to sell until the London breakout. Same thing if the market from s a new low, you will want to buy until the London open. So, bracket the trade to ensure you can catch it in either direction (straddling the market) pip target, pip stop loss. This is a bit better than 1:1 reward to risk ratio. Verify on the previous days to see if the stop loss still stands. Adjust as necessary. Set a bigger TP if you can see a very obvious high or low present at 3 AM GMT set it to pips. Because the low creates a buildup of momentum and shoots it the other way. Shawn uses this trade in his funded account to generate income. 5

FOREX UNKNOWN SECRET. by Karl Dittmann DISCLAIMER

FOREX UNKNOWN SECRET. by Karl Dittmann DISCLAIMER FOREX UNKNOWN SECRET by Karl Dittmann DISCLAIMER Please be aware of the loss, risk, personal or otherwise consequences of the use and application of this book s content. The author and the publisher are