Overnight Areas to Avoid

Lessons from the Darkside · Lesson 7

Most of my worst overnight trades were not bad reads. They were decent reads taken at the wrong hour, in a book so thin you could see the floor through it. This lesson is a map of the places I no longer go.

Most of what makes a night trader profitable is not what they take. It is what they leave alone. These are the places in the Globex session where I have learned, expensively, not to trade.

1. The quiet hours

Between about 11 pm and 2 am Eastern, Asia is at lunch and Europe is asleep. The book is at its thinnest, ranges are small, and the moves that do happen are often stop runs through a level that immediately reverse. It looks like opportunity on a chart. In my journal it looks like a list of small losses and one or two large ones. I am flat in the quiet hours unless something unusual is going on, and even then I am usually flat.

2. The first candles after the reopen

The 6 pm reopen is a resumption, not an auction. The first few minutes are queued orders and position adjustments near the settlement price. There is no structure yet to trade against. Let the Globex initial balance form.

3. Scheduled news in a thin book

Japanese, Australian, Chinese and European data, central bank speakers, and anything to do with the yen. A release that would move the day session a few points can move the night session through three levels because there is nobody on the other side. Know the Asian and European calendars before 6 pm. Resting orders come out before a release that lands in your window.

4. The 5 pm halt

The daily maintenance halt from 5 to 6 pm Eastern is not something you trade into. If you are holding a position at 4:59 pm it will sit through the halt with no ability to exit, and some prop firms require you to be flat before it. Read your firm’s rules; mine are in the journal.

5. The 8:30 am data, when you should be asleep

US economic data at 8:30 am Eastern is the most violent moment of the overnight session. If you trade the front half of the night as I do, you are asleep for it, which is exactly where you should be. Nothing from your evening session should be resting through 8:30 unprotected.

6. Holiday and half-session nights

The night before a US holiday, the night of a European holiday, and the Sunday reopen after a long weekend all trade on a fraction of normal volume with none of the usual participants. Levels mean less, ranges are erratic, and the edge I rely on, planned trades at tested levels, is not there. These are reading nights.

7. A bad day at work

Not a time on the clock, but the most dangerous area of all. The night session is available every evening, which means it is available on the evening you are angry, exhausted or distracted. A trader with a day job needs one more rule than a full-time trader: some nights you do not sit down. The schedule lesson is about that.

Lesson 8 turns to the levels themselves: which ones matter after dark and how to mark them.

Questions people ask

What are the worst times to trade the overnight futures session?

The quiet hours between roughly 11 pm and 2 am Eastern, the first candles after the 6 pm reopen, scheduled Asian and European data releases in a thin book, the 8:30 am US data if you are not deliberately trading it, and holiday or half-session nights.

Can I hold a futures position through the 5 pm maintenance halt?

Positions carry through the halt but cannot be exited during it, and some prop firms require you to be flat before it. Check your firm’s rules before holding anything into 5 pm Eastern.

Why are holiday nights bad for overnight trading?

Volume is a fraction of normal and the usual participants are absent, so levels mean less and ranges are erratic. The edge of planned trades at tested levels is not there.

Next lesson: The Levels That Matter After Dark.

Photo: Wes Hicks on Unsplash.