This article will explain how even a relatively new and inexperienced trader can easily gain 10 or more pips a day on average – by observing and taking advantage of a common market behavior pattern during the day New York Close, or from 2 pm to 4 pm Eastern time (New York time).
Once a trader has observed the forex market for a length of time, he or she will recognize that the market does have certain habits and does frequently repeat daily patterns of activity. Learning these patterns and recognizing these habits does not require any special knowledge, training or education. All it takes is careful observation and looking for patterns as to how the market tends to have during certain times of the trading day. As a new trader, if you spend enough time observing the market movements with respect to time of day, you will begin to see some regular predictable patterns.
One of the market's predictable habits occurs in the New York afternoon, after 2 pm EST and into the final New York daily closing. Most notably, this pattern is most frequently observed in the EUR / USD. During this time of the trading day, trading flows are usually light and volatility is low. One pattern that has been very consistent over time, for whatever reason, is that there tend to be a pivot that becomes apparent sometime just after 2 pm EST. By "pivot," I am referring to a "pullback" or "retracement" from the overall day's predominant trend.
In other words, if the trend of the day for the EUR / USD has been rising, then between 2 pm and 3:30 pm EST, the market will typically see a pullback lower, usually around 20 to 30 pips. On the other hand, if the daily trend for the EUR / USD has been downward, then after 2 pm a retracement of 20-30 pips higher is often observed.
By checking the market or checking the charts in the New York afternoon around 2 pm Eastern time, a new and even an inexperienced trader may recognize this pattern and then safely execute a high probability trade. If a person is available to trade at this time of day on a consistent basis, they could expect to gain an average of 10 pips a day with a fair amount of ease.
In closing, I must state the obvious disclaimer – that trading forex is a risky endeavor with no guarantees. Trade with caution and never trade more than you can afford to lose. Spend time observing the market to recognize its patterns so you may make smart, high probability trades and minimizeize risks.
Source by Ann Pevey