Night Owl Counter-Trend Trading

While the Forex markets only technically close from Friday at 5:00pm eastern through Sunday at 5:00pm eastern, large banks and institutions (which make up over 95% of the total trading volume) do follow standard business hours and cease trading at 4:00pm every day. So, while the banks are closed, volume drops off dramatically and the markets tend to move in a ranging (i.e. counter-trend) mode. The retail traders (i.e. you and me) simply don’t move enough money to cause large breakouts or new trends. Normally this would be a bad thing, but for traders who know how to trade in counter-trend markets, this is a DAILY golden opportunity.

The sweet spot to take advantage of this “predictable moment of opportunity” is when the U.S. banks close at 4:00pm eastern but before the Asian banks re-open at 7:00pm eastern, but volume really drops off so much in the final hour of trading that you can usually broaden this window to 3:00pm – 7:00pm eastern. This means you have a solid 4 hours EVERY TRADING DAY to scalp some pips off themarket if you know what I do. And here’s one way of doing that:

The screenshot above shows two examples of “Night Owl” trading on two different days. In this case I’m using the Price Action Channel set to 2 periods on the EUR/USD hour chart, and as you can see I was able to pull 43 pips out of the market one day and 42 pips the next.

Here’s another example from the USD/JPY…also on the hour chart:

This example shows three “Night Owl” trades, three days in a row, and this time I was able to pick up a total of 80 pips over 3-sessions. And remember, this when most traders have “called it quits” for the day! Now, for the sake of full disclosure, I will tell you that I don’t personally trade the Price

Action Channels as I’ve shown above. While the system above works well, I have developed a proprietary counter-trend strategy that is even more accurate that I’ll tell you about at the end of this report. More on that in just a bit…for now, let’s look at the 2 nd “predictable moment of opportunity” during counter-trend conditions.

“Night Owl Counter-Trend Trading real setup for trading

Time frame 10min 15 min, 30 min

Currency pairs: majors with low spreads.

Session: 21:00 GMT – 7:00 GMT

Forex Indicators:

Simple moving average, period 5, high.

Simple moving average, period 5, low.

Stochastic oscillator (8,4, 4).

Trading rules

Buy

When the price breaks the lower SMA wait that stochastic crosses upward.

Sell

When the price breaks the upper SMA wait that stochastic crosses downward.

Initial stop loss 7 pips above/below the entry bar.

Profit Target 7 -15 pips depends by time frame and pair.

In the pictures examples of trading with Night Owl Counter-Trend Trading