I think it is pretty well-documented that there is a low volume zone every day. I trade futures and that that zone is from 11:30 AM Chicago time zone until 1:45 or 2 and then volume picks up for the next hour until close. I decided to take a hard look at my actual real money journaled trAdes and back test. No big surprise that if I just do not take any trades on entry during those times zones my results increase dramatically. I was surprised to see how big of a difference it made. It literally cut my trade activity in half and my win ratio goes from 42% to 58%! Does anyone follow a strAtegy that adheres to this no trade zone? Comments.
In general, there are periods where we avoid trading because big boys have already done what they wanted to do and they probably go for long breaks. So we traders also go for long breaks. But lately over the past 2 weeks, markets are very hot. Signals can come out of nowhere (or rather come out from everywhere). There is no such thing as No trade Zone because everywhere is trading zone. I am exaggerating just a little only. My point is market is dynamic. we need to adapt to changes in market condition. We need to change our view, our mindset, our way of trading, our trading strategy ....
I actually have it sitting on my computer now doing continued back testing. If I only take entries for that first session today. My win ratio actually goes to 71%! It appears that the low win ratio is just not worth the effort on trades that enter after 11:30 am CST. And yes I would have to we flexible and willing to enter trades outside of that best time zone for the last two weeks.
My suggestion is to not only avoid that lunchtime zone, but to limit your trading hours in general (I am talking equities and equitiy futures here). Usually we have some really good volume and moves at the NYSE opening. On many days you can grab a good amount of ticks on ES and/or NQ within the first 15-30 minutes. Why not quit and enjoy the rest of the day ? So much better for your psychology, keep stress levels low, enjoy life. Very focussed trading for a short amount of time, like the first 60-90 minutes. Try to perform with excellence in that time window, make a few ticks, get consistent with that and slowly scale up over time. Much more time for other activities, family, sport, quality life. This balance will help you with longevity as a trader. It is a marathon, not a sprint, if you really want to consistently build some wealth with this profession. Of course there are exemptions from this... I myself traded almost the full RTH session during the February VIX spike days for example, and now again the same with the increased volatility we are seeing now these days. If you know what you are doing then these days are almost free money on the (wall)street, and one would be a fool to not pick it up. Just like NoDoji used to say during the times of the Arab Spring and the high volatility in CL back then: Make hay while the sun is shining. https://www.elitetrader.com/et/threads/cl-redux.178741/page-1631#post-3105021 Greetings and good trading to you all today, CALLumbus
John.... I found something similar when I took all my realtime futures trades and analyzed those trades in 30 min increments over the full daytime trading day.... I now enter trades from 5am pacific time thru 9am pacific time. This change from trading all day improved my overall profits. But this is me and others might have a trading process that allow them to trade all day. cheers toucan
This is like a whole new level of understanding for me. This week I took 17 trades in 4 days, no trades today cause I was away from computer. And my results were 7 winners and 9 losers. If I only took trades that entered no later than 930 am pst, I take 7 trades and win on 5 with 2 losers. That’s amazing! this doesn’t consider when I exited. There were trades were held over 120 minutes. But the next move would be to walk away, turn the darn computer off and go enjoy life after I’ve made my money for the day.
Have you ever thought you are not adapting to this other area of trading? So if first 3 hours you are doing one type of signals like breakouts, and works fine during this time, so what would happen if during slow periods you literally buy lower or sell higher and risk much less? I learned long ago that no matter what time it is, learn to keep open mind and some signals turn off and others comes alive.