Forex Trading Late Night

I have been trading spot forex in the evenings. I am primarily a futures trader but have found that there is good trading in certain currency pairs when I get home between 10:00 PM and 11:00 PM EST (USA).

This is not only good practice but rather enjoyable. There are few professions I can think of that you do for 10-12 hours a day then go home and enjoy doing more.

I have found myself getting into trouble lately taking entries that have excellent structure on a 5 minute or 400 tick chart but no significant support or resistance on a higher time frame. These trades often accomplish 10-30 pips open equity then retest my entry point and often violently push through and run any reasonable stop I had in place.

This makes it difficult to manage win % and win/loss ratio. I seem to need at least a 15-20 pip stop in most cases which means I do not want to take profits that are much less than 40 pips.

This leads me to determine that unless you are somehow scalping in these markets, it is imperative to structure your trades on an hourly chart or higher THEN fine tune the entry with a shorter time frame chart.

The problem recently is that I do not see many entries on the hourly charts. Maybe some of you that watch the FX markets can concur. Everything is at the end of a massive action or reaction move. I can not find much longer term support or resistance.

So I am up at midnight taking fairly low probability trades for the sake of seeing some ACTION and getting frustrated with the results. I started watching FX because there are many pairs so there has to be more good setups right? Not exactly. Most of the spot FX pairs have a direct negative or positive correlation with the indexes. This means that most currency pairs either move with or inverse to the indexes. So I may see many more setups in the FX but most are frankly just noise.

I still think you can establish a good edge in the spot FX and when you are right and the volatility can lead to huge profits. However, you must be MORE selective with your trades. Watching as many pairs as I do tends to make me less selective which explains why my FX performance has been less than adequate over the past week or so.

I suppose writing about this is good training for me. I have just outlined why my FX trading is grinding a bit lately. Much better than any red/green arrow system or "robot" everybody is trying to sell.

I have posted a USDJPY short im in right now 4:22 PM EST USA. We will see if it opens up. Also, a couple good ES sequences from the past week.