The dead zone between New York close and Wellington open

[Shadow Trader]

Roughly 5pm to 6pm New York is the thinnest stretch of the whole trading day. New York has gone home, Sydney and Wellington are only starting to stir, and liquidity is at its lowest.

Quotes can stick for several seconds, then jump two or three ticks at once. It looks like a market with no activity, and then a single mid-sized order moves it more than it should.

Not much to add beyond that. Scalpers who find a "pattern" in this window are usually seeing a handful of random jumps and a lot of spread noise.

It also doesn't help that most brokers widen their quotes at the same moment, so the cost of every entry is highest exactly when the information content of the price is lowest. A backtest that ignores this will show a lovely equity curve built entirely on spreads that never existed in real trading.

The honest options are to sit it out or to trade it with a tiny size and treat every fill as a data point about the broker, not about the market.

Is there anyone who consistently makes money in that hour, or is the smart move simply to be flat?

[Amanhasnoname]

I spent about a month trying to prove you wrong on this, mostly because the hour suited my schedule after work. I traded EURUSD and AUDUSD in that window with the smallest size my account allowed and kept a separate tab in my journal just for it. By the end of the month I was down a modest amount, and almost every pip of the loss came from the entry spread rather than from bad direction.

What I noticed was how often price did nothing for ten minutes and then lurched three or four ticks in a single update, usually right through whatever level I was leaning on. It felt like trading against a broken quote stream rather than a market.

The only useful thing I got out of it was information about my broker. I could see how far they widened, how long they took to tighten back up, and whether stops were filled sensibly. As a place to make money, I'd say flat is the honest answer, and I've been flat in that hour ever since.