Day trading
How the session clock splits the trading day
The forex market runs for 24 hours from Monday morning in Sydney to Friday evening in New York. That single continuous stretch is divided into sessions by the financial centres that are most active at each time. The three main sessions are Tokyo, London and New York. Each has its own opening and closing times, and the overlap between London and New York is often the busiest part of the day.
For someone in the Philippines, the clock looks different. Tokyo opens at 8:00 a.m. local time and closes around 5:00 p.m. London opens at 3:00 p.m. local time and closes around midnight. New York opens at 8:00 p.m. local time and closes around 5:00 a.m. the next morning. The busiest overlap, when London and New York are both open, runs from 8:00 p.m. to midnight Philippine time.
A day trade on EUR/USD is usually opened and closed within one of these sessions. The choice of session changes how the chart behaves. The Tokyo session often has smaller moves and narrower ranges. London and New York tend to produce larger moves and more frequent price swings. The chart will show this if you compare the same pair across different times of day.
What the chart shows when you zoom in
On a daily chart, one candle covers a whole day. On a one-hour chart, one candle covers one hour. On a five-minute chart, one candle covers five minutes. Day trading means working on the smaller timeframes, often from one minute to one hour. The chart will show many more candles than a daily chart, and each candle represents a shorter period of market activity.
When you switch to a smaller timeframe, the same price movement looks different. A 20-pip move that is a small blip on the daily chart becomes a large, clear swing on the five-minute chart. The chart is not lying; it is simply showing more detail. That detail is what a day trader uses to decide when to enter and exit.
The chart also shows the spread. The spread is the difference between the price at which you can buy and the price at which you can sell. On a small timeframe, the spread is visible as a gap between the bid line and the ask line, or as a small distance between the current price and the nearest executable price. The spread is a cost on every trade, and it is wider when the market is quiet and narrower when the market is busy.
The costs that appear on a day trade
A day trade avoids the swap charge because the position is closed before the daily cut-off. But other costs still apply. The spread is the first. On EUR/USD, a spread of 1 pip means that a trade must move 1 pip in your favour just to break even. The spread varies by broker and by time of day. It is often wider at the start of the Tokyo session and narrower during the London-New York overlap.
Commission is the second cost. Some brokers charge a separate commission on each trade, usually a fixed amount per lot or a small amount per side. The commission is not shown on the chart, but it reduces the net result. If a broker charges a commission, the break-even move is larger than the spread alone.
The third cost is the conversion into pesos. Your account may be in pesos, but EUR/USD is priced in US dollars. When you close a trade, the profit or loss is in US dollars and is converted into pesos at the broker's rate. That rate includes a small markup, which varies by broker. The chart will not show this conversion, but it affects the final amount in your account.
One day on EUR/USD: entry, hold, close before rollover
| Step | Amount | Note |
|---|---|---|
| Entry price | 1.0850 | The price where the buy order is filled in the morning session. |
| Exit price | 1.0870 | The price where the position is closed the same day, before the rollover cut-off. |
| Distance moved | 20 pips | 1.0870 minus 1.0850 is 0.0020, and 0.0020 divided by 0.0001 is 20 pips. |
| Pip value on one standard lot | 10 units of the quote currency | 100,000 multiplied by 0.0001 equals 10, before conversion into pesos. |
| Gross result before costs | 200 units of the quote currency | 20 pips multiplied by 10 per pip equals 200, before conversion into pesos. |
| Swap for the day | ₱0 | The position is closed before the daily rollover, so no swap is charged for holding it overnight. |
| Costs that still apply | varies by broker | The spread and any commission are charged on entry and exit and are not shown above. |
The broker may round the pip value, quote a different conversion rate for the peso, widen the spread near the session close, and charge a commission on top. The swap is avoided only if the position is genuinely closed before the broker's cut-off, which varies by broker.
Doing it once, step by step
Here is one way to plan a day trade on EUR/USD, from reading the chart to closing before the cut-off. Follow the steps in order.
- 01
Open the chart and choose a timeframe
Start with a one-hour chart to see the recent range. Then switch to a five-minute chart to see the detail. The one-hour chart shows the overall direction, and the five-minute chart shows where price is moving right now. Use both together.
- 02
Mark the session times on the chart
Note when the London or New York session opens and closes in Philippine time. The chart will show a change in activity around those times. Plan to trade during a session when the market is active, not during the quiet hours between sessions.
- 03
Identify a recent price level
Look for a price where the market has turned before, such as a recent high or low. On the five-minute chart, draw a horizontal line at that level. This is your reference point for a possible entry or exit.
- 04
Decide your entry, stop and target before you trade
Write down the price at which you will enter, the price at which you will exit if the market moves against you, and the price at which you will take a profit. Also write down the time by which you will close the trade, before the broker's daily cut-off. Do this before you place the order.
- 05
Place the trade and watch the clock
Enter the trade at your chosen price. Watch the chart, but also watch the time. If the market has not reached your target or stop by your planned exit time, close the trade manually. Do not hold it past the cut-off.
- 06
Review the result after the close
Once the trade is closed, check the net result after spread, commission and conversion into pesos. Compare it with what you expected. Note whether you followed your plan or changed it while the market was moving. Use that note for the next trade.
The mistake most people make here
The common mistake is to hold a day trade past the session close because it is slightly down, hoping it comes back. That turns a planned same-day trade into an overnight position, which can add a swap charge and exposes the account to news that arrives while the market is closed. Decide the exit time before entering, and treat it the same way as the stop. If the position is still open near the cut-off, close it and review the decision afterwards.Check yourself
EUR/USD moves from 1.0850 to 1.0830 on one standard lot. How many pips is that, and what is the gross result before costs?
1.0850 minus 1.0830 is 0.0020, which is 20 pips. At 10 units of the quote currency per pip on one standard lot, 20 multiplied by 10 is 200 units of the quote currency, before conversion into pesos and before any costs.
A day trade is opened at 1.0850 and closed at 1.0870. If the broker charges a spread of 1 pip, what is the net result in pips?
The price moved 20 pips in favour of the position. Subtracting the 1 pip spread leaves 19 pips. At 10 units of the quote currency per pip, that is 190 units of the quote currency before conversion into pesos and before any commission.
Questions that come up next
How is the peso value of a pip worked out?
One pip on one standard lot of EUR/USD is 10 units of the quote currency, which is US dollars. That 10 dollars is then converted into pesos at the current exchange rate. If the rate is 56 pesos to the dollar, 10 dollars is 560 pesos. The rate moves during the day, so the peso figure moves with it.
Does the spread change during the day?
Yes. The spread is the gap between the buy price and the sell price on the chart. It is usually wider when the market is quiet, such as late at night Philippine time, and narrower when London and New York are both open. A wider spread means a larger cost on the same trade.
What happens if I close the position just before the cut-off?
The broker applies the swap charge only to positions still open at its daily cut-off. If you close before that time, the charge is avoided. The cut-off varies by broker, so check the platform clock. Closing a few minutes early is safer than cutting it close.
Can I day trade EUR/USD from the Philippines?
Yes. The forex market runs 24 hours from Monday morning in Sydney to Friday evening in New York. From the Philippines, the busiest hours are the London and New York overlap, from 8:00 p.m. to midnight local time. You can trade at other hours, but the chart often moves less.
What does the chart look like on a five-minute timeframe?
On a five-minute chart, each candle covers five minutes. A 20-pip move that is a small blip on the daily chart becomes a large, clear swing. The chart shows more candles and more detail, which is what a day trader uses to decide entries and exits.
How do I pay for a course or deposit funds?
The payment methods mentioned for this site are GCash and bank transfer. The course itself is free. For any deposit to a broker, the methods vary, so check with the broker directly. The SEC Philippines regulates investment products, but not every broker is covered.
The words used on this page
- swap
- A charge a broker applies to a position held past the daily cut-off. It is based on the interest rate difference between the two currencies. A day trade closed before the cut-off avoids it.
- pip
- The smallest standard move in a currency pair. On EUR/USD, one pip is 0.0001. On one standard lot, one pip is 10 units of the quote currency.
- spread
- The difference between the price at which you can buy and the price at which you can sell. It is a cost on every trade. It is wider when the market is quiet and narrower when the market is busy.
- session
- A period when a major financial centre is most active. The three main sessions are Tokyo, London and New York. Each has its own opening and closing times.
- standard lot
- A fixed size for a trade, usually 100,000 units of the base currency. On EUR/USD, one pip on one standard lot is 10 units of the quote currency. Smaller lot sizes are also available.
What to take away
- A day trade is opened and closed inside one session, so the position is not held overnight.
- The swap charge is avoided only if the position is closed before the broker's cut-off, which varies by broker.
- The spread is a cost on every trade and it changes with the time of day.
- The peso value of a pip depends on the current exchange rate, so it moves during the day.