Should I use after hours trading analysis for futures and forex

The financial markets are always reacting to orders being placed by institutions, commercial traders and even individuals all over the world. Each asset class and instrument will have its own trading hours depending on what exchange it is traded on in the world. Regardless of when these orders get placed, if they are not filled they remain on that particular exchange until they are executed. For all intensive purposes futures and forex markets are the best for this topic because they are open for the majority of the day and night.

Each day it is very important to include all of the data that you are given into your trading analysis including after hours! When the institutions have orders that are sitting on any given exchange we can use that information to add probability to our upcoming trade opportunities. If they place those orders during the day there is a good chance that the markets will react to that, however if an abundance of orders are placed in after hours trading, not many will see that because the market is not active. When we return to the area in which the orders were placed price will then react because the equilibrium will be out of balance. This is where the supply and demand equation will fit in and he who holds the most will win.

The most important thing one can know about any given financial market is where the largest piles of orders reside on the exchange at all times. This is simply due to the ongoing process that supply and demand will always control the movement of price. So not having all of the data can be very harmful to your analysis.

Let's look at this from a logical stand point and relate it to everyday life. If a department store decided to move its location, they may have an afterhours sale to reduce the supply of goods. Would you not go and purchase something from that store if it were 50% off just because they decided to stay late that week? This may seem a bit unorthodox or strange to compare a department store to the financial market, however the point is that no matter when the sale takes place you will want to be a part of it and the same for the inverse (if you are the one selling).

In conclusion order flow may be placed at anytime during the day or after hours trading. We want to focus on the fact that they were placed, not when they were placed.