Here’s a way to find regular short-term trades at night…
(You can even trade them while you’re tucked up in bed asleep!)
I’ve got more short-term trading stuff for you this week…
And one question that crops up quite often is this: Can you still use scalping methods even if you can only trade in the evening?
So let’s focus on that today.
Now the only problem looking for very short-term trades in the evening is you’d be limited to trading markets that are active enough at the time. Here in the UK most of the action for the day in big markets like EURUSD and GBPUSD has usually played out during the London and New York sessions, so trading short-term in the evening sometimes be a bit like watching paint dry.
But you can still get involved if you know a few tricks. (Ones that don’t have you nodding-off from boredom!)
Let’s take this one for example: The Asia Fade.
This is a method that that lets you place a couple of simple orders as the market rolls over into a new 24-hour period. One of more of the trades is typically triggered during the early AM Asia session, hence the name.
Now I’ll pass the details on here exactly as they were originally traded, but please do test tweak and refine according to your own observations…
You might find a smaller (or larger) profit target works best. Or you might discover a way of applying a directional bias – taking only buy trades or only sell trades – that increases the edge in probability.
So treat the ideas I’m sharing below as a foundation and then make the method your own. (If it appeals to your own tastes in the first place of course!) And please do let me know if this is the kind of stuff you’d like to see more of: it’ll help me cover the things you’d really find most useful.
Why scalp using ‘The Asia Fade’?
This is a super-simple set-up, the levels are purely mechanical and they’ll take literally 10 seconds to calculate.
We’re going to look at fading a move to one (or both) of these two levels. (‘Fading’ just means we’ll be looking to profit by the market making a small reversal off our price level.)
With these orders, we wait for the market to move to us and pick our order off, and we’ll be trading against the short-term trend (fading it), so it can be a bit of a test of your nerve to stand in front of the oncoming train if you’re watching the trade play-out live.
But the beauty of this method is its simplicity, its regularity (you can set-up your working orders before you go to bed every evening) and the objective nature of the setup.
This is something you can forward-test starting tomorrow (or tonight if it’s early enough).
As always, we’re not expecting to make money on every trade – we’re letting expectancy work for us in the long run, building our account equity as we go.
Why does the Asia Fade give regular scalping opportunities?
Institutional traders, who are active in deeply traded markets like the currencies (Forex), tend to be working large positions and they’ll typically scale in and out of their position to balance their book.
For example, they might be ‘spreading’ a position in the euro against a corresponding position they are holding in the yen or Swiss franc, and they’ll adjust their holdings accordingly as the markets fluctuate.
They’re not sat waiting for indicator lines to cross or any of that stuff. They’ll have orders working at predetermined levels ready to trigger as the market moves to them.
And their orders can be huge – enough to temporarily knock the short-term trend back on its heels.
One of the regular levels they tend to use in EURUSD is 12.5 pips above and below the opening range for the day (the level is at 12.5 pips, but you can enter slightly inside the level to get your orders working in front of the institutional guys and also to accommodate the broker’s bid/ask spread).
Fading one or both of these two levels give this opportunity we call The Asia Fade.
This set-up exploits the first bands of support and resistance the institutions will be eying as we roll over into the new trading day… The market wakes up with a yawn and gives a stretch to probe at least one of these levels, usually in the overnight (Asia) session, on a regular basis.
So let’s head to the charts now for a look at how you might trade it.
The Asia Fade: step-by-step
i) Make a note of the high and low of the very first one-minute bar printed on the day you want to trade the Asia Fade levels – this is your overnight opening range. NOTE: Make sure you use the London time-zone for your calculations.
ii) Take your opening bar high and add 0.00125 pips to calculate the upper Asia Fade level – illustrate the level with a horizontal line on the chart.
iii) Take your opening bar low and subtract 0.00125 pips to calculate the Lower Asia Fade level – drop the horizontal line onto your chart.
iv) Place any entry orders you want to work with that evening.? Your LIMIT SELL order goes just under the Upper Asia Fade level.? Your LIMIT BUY order goes just above the Lower Asia Fade level.
v) Have your exit orders planned…
Place your exits as an OCO (one-cancels-other) bracket order. This means once your entry order is filled, your broker automatically enters a limit order for your profit target and a stop loss to bail you out if the trade goes against you. (Metatrader makes this really easy for you – just choose ‘LIMIT order’ off the ‘pending orders’ drop-down menu on the order ticket and make sure you specify a profit target and stop loss price too.)
The beauty of the OCO orders is that as soon as one side is filled the other side is automatically cancelled, i.e. if your profit target gets hit, your broker automatically cancels your stop loss. This can be a tool to help improve your trading discipline – you just need to let the trade play out.
You can even be tucked up in bed while the trading action takes care of itself.
So let’s see what we get later in the day on this example (we’ll move onto a five-minute chart now, just to keep things clear).
At around 0:45 a.m. our buy order gets filled as the market moves down to test the lower Asia Fade…
Exit orders are placed automatically by the broker as soon as we are filled on the entry order (even if we’re tucked up in bed at the time)…
In this example we’ve now got a SELL LIMIT order working at 1.2824 for our target and a SELL STOP order working at 1.2804 for our stop loss:
The lower Asia Fade level holds as support and we get filled on our target exit order at around 01:05 a.m. for a 10-pip profit…
The stop loss order is cancelled automatically by the broker once you’ve taken your pips off the table and the opportunity for the lower Asia Fade level is now spent for this day.
Now although it can be quite common for only one of the entry orders to get hit on the day – and that can very often happen in the overnight (Asia) session – on this particular day we also get filled on the sell order too, early in the London session…
The upper Asia Fade level holds and we’re filled at target for another 10-pip profit:
The remaining stop loss order is cancelled by the broker and we’re done for the day on this set-up. We won’t have any working Asia Fade orders now until midnight when we’ll place brand new orders for the next day’s trade.
So… pretty simple, right?
You’re not going to become filthy rich overnight or anything, but this is a nice way to get involved with short-term trading, even if you’re out and about during regular market hours. (And you don’t even need to stay awake to do it!)
Be Prepared: Market Moving Data Coming This Week (London Time)
Wednesday 9th December
– no big reports
Thursday 10th December
12:00 GBP Interest rate decision/BOE minutes
18:00 GBP BOE Carney Speaks
Friday 11th December
13:30 USD Core Retail Sales
13:30 USD Producer Price Index
Monday 14th December
– no big reports
Tuesday 15th December
09:30 GBP Consumer Price Index
10:00 EUR German ZEW Economic Sentiment
13:30 USD Core Consumer Price Index
Please do let me know how you go about adapting the Asia Fade method to suit your own circumstances. And do tell me if this is the kind of stuff you find useful (much more to come in the New Year remember).
Until next time, happy trading!
