Fade or follow the same level: the clock decides

[Fairman]

Fade or follow the same level: the clock decides

A level can be defended or broken. Whether fading or following is better often depends on the time of day.

During Asian hours, with thin flow, levels tend to hold, and fades work better. Breakouts are frequently false and reverse. During London and New York, with heavy flow, levels give way more often, and breakouts carry momentum.

The same chart pattern can mean different things at different times. A double top at 3am is probably a range. A double top at 8:30am New York, ahead of a data release, is probably a coil about to resolve.

Often the sign of expectancy flips between sessions. A strategy that loses overall may be profitable in one window and unprofitable in the others.

Using time as a filter converts a mediocre all-day approach into a selective one with a clearer edge.

Does a single rule behave differently across sessions in the records?

[Fairman]

The same level can act as support one day and break the next, so deciding whether to fade a level or follow a break is one of the hardest choices in trading. Context helps. If the market is ranging, levels tend to hold more often, favouring fades. If the market is trending, levels tend to break, favouring follow through. Recognising the market state before price reaches the level gives a basis for the decision. Tools like average true range, the slope of a moving average or the session can help judge whether the market is ranging or trending.

[Amanhasnoname]

My records say yes, quite strongly. I tracked one rule, fading the first test of the previous day's high, across 95 trades, and I split them by time. During the London open hour it worked in only about four out of ten cases, since breakouts there tend to carry. Between roughly 13:00 and 15:00 London time, after the New York open, it worked closer to six out of ten, because price often tested the level and then stalled during the lunch lull.

The rule was identical in both windows, so the difference came entirely from the clock. Before I did this I thought the setup was flawed because my overall result was almost flat, and it was only the split that showed one half was positive and the other half was giving it back.

I now only take the fade after the first hour of London has passed, and I follow the level if it breaks before then. It's a small change on paper, but it removed a lot of my frustration.