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Scalping strategies V: What are trading sessions and how to work with them

17 Jul 2017,

It has been already a few years ago when I have realized how crucial are trading sessions for scalping. Why? And how to work with them? Let’s have a look at it in our article.

What are trading sessions?

There are several trading centers around a globe and as the globe turns, the market is running in different places. We have therefore 3 main trading sessions, European American and Asian.

In this table, you may find the times of the main sessions:

The most liquidity can be found in European (London) session and the smallest liquidity is in the Asian session.

Asian session seems to be the best for chop strategy, the problem is in the spreads.

Spreads during the trading sessions:

Let’s have a look on an example of AUD/CAD on ECN Purple Trading account.

Based on the spread size we can distribute the market into three sessions (times are for GMT+1 timezone):

Between 23:30 – 01:30, the spread is really high, in average 6 pips and you should avoid this time.

Between 01:30-2:30 spread is decreasing to 1.4 pips

Between 2:30 and 23:30, the spread is around 1,4 pips.

For most of the time, the spread is stable, but you have to avoid some times, especially during the night session. If you would have build your strategies for the midnight time, when the spread is really high, you could find really nice strategies, but the results can make you pretty unsatisfied.

How to work with sessions?

Search for anomalies, for example times when the volatility is higher or when one session ends and other is about to start. Don’t be afraid to test more exotic pairs as AUD/CAD, where the direction is more sidewise.

Sessions are crucial for scalping, so don’t be afraid to work more with them.   

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