In Forex trading the investors conform with the market time in four different part of the world, which means that trading may continue 24 hours a day.
Being awake for 24 hours a day, watching closely the markets and the financial news in different parts of the world could be exhausting. So it is necessary to make your own graphic, by which help, you are going to trade more efficiently, recommends Investopedia.com.
Currency trade is unique, due to the hours in which you make it. For traders the week begins on Sunday at 6:00 am in New York and ends on Friday at 4 pm. It is not obligatory to trade all the time. There are more active and less active hours. In these parts of the day, where several markets are open at the same time, there is higher activity, more fluctuations, and analogically more opportunities. When a single market is open, the currency pairs usually remain within the framework of spread round 30 pips. In two open markets they can move within the frames of 70 pips, especially if there are important international news.
The four markets:
New York – New York is considered by many investors to be the second biggest Forex market in the world, it is followed very carefully by the analysts, because the U.S. dollar is at 90% of the transactions. The things that happen in NYSE could have an immediate reflection over the value of the dollar. When there is a merger of companies or acquisitions are finalized, the dollar may instantly rise or fall significantly, depending on the situation.
Tokyo – most of the Asian transactions are made in Tokyo market. The best currency pairs you should follow are USD/JPY, GBP/CHF и GBP/JPY. When the Tokyo market is the only open one, follow the pair USD/JPY. The Bank of Japan has a large impact on the market.
Sydney – this is the market, which opens first and it is the smallest of the four. Nevertheless, when it opens again in Sunday afternoon, the activity is extremely high, because the traders and the institutional investors are trying to stabilize their positions after the trading in Friday afternoon.
London – London Forex market is number one, it is open for 34% of the world transactions according to IFS London.
As we noted above, it is better to trade mostly in time when at least two markets are open. There are three basic overlaps:
USA/London – The most serious overlap is in the working hours of the stock exchanges in New York and London. More than 70 percent of transactions are made at this time range, and yet the dollar and the euro are the two most popular currencies.
Sydney/Tokyo – This period is characterized by lower volatility than the overlap period of USA/London Stock Exchange, but it offers more opportunities than one open market. A basic pair, on which you should focus is EUR / JPY.
London/Tokyo – this period is not very active, because it lasts one hour. Moreover, at this time in New York, it is 3 am in and there are not so many enthusiasts who want to stay awake for the sake of trading.
Another factor, on which you should pay attention is news. Some of them immediately influence on trading, especially when they are against the analysts’ forecasts.
News that worth watching are:
– decisions on interest rates
– trade deficit
– meetings of central banks
To be more confident that you do not miss opportunities choose priority trading hours for yourself. Hardly is there anyone who could be on alert all the time. When a person has schedule and priorities, everything looks easier.