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There are, however, better times of the day and certain days of the week that are optimal for trading the forex. Knowing the keys times and days of the week are important if you intend to really maximize the profit potential that the forex can offer. First, it’s important to understand that the forex is comprised of individual financial markets of various countries. The forex is a decentralized market that allows countries, financial institutions and individual investors to buy and sell almost any currency in the world. The value of a nation’s currency is always fluctuating or changing in relation to another nation’s currency. It is the goal of a foreign exchange investor to position one’s self favorably to profit from the price differences in exchange rates through the forex. Even though the forex itself is available for trading on a 24-hour cycle, individual national financial markets do open and close daily. When it is day in one part of the world it is night in another part and business is not occurring. Because of that, there are certain times of the day when the activity on the forex may be less or more volatile and liquid. The major markets of the world are found in the Asian and Australian markets, the European markets and the US market. The Asian/Australian markets are open from 7PM to 3AM Eastern Standard Time. The European markets are open from 3AM till 11AM Eastern Standard Time and the US market is open from 7AM till 4PM Eastern Standard Time. Knowing the times the major markets open is important. Generally, the first 3-5 hours after those markets open are the best times to trade due to the fact that opening markets experience a high degree of volume and volatility as currency prices can change and swing dramatically as price corrections are made but the currencies will usually tend to move in a predictable direction. Trading during the first several hours can bring in large sums of money. Another excellent time to trade the forex is between the hours of 7AM and 11AM. This is so because the US market and the European markets are open at the same time and are overlapping. That further increases volume and creates many more potential profitable trades. Now that we know the best times of the day to trade the forex we must next know that Tuesdays, Wednesdays and Thursdays are typically the best days of the week to trade forex. Currency prices tend to be more predicable and follow along trends and analysis principles. That doesn’t mean to never trade on Sundays, Mondays and Fridays. Just understand the following when trading which can make entering into profitable positions a bit more difficult: Mondays are coming off of the weekend for the major markets, especially the US market. Over the weekends, currency prices may trend out of sync from accurate prices due speculative buying and selling pressure. On Monday of each week, the currency prices are likely to be more unpredictable as the markets adjust. On Fridays, positions are usually closed prior to going into the weekend to shield against drastic weekend events that could cause losses. Fridays are very volatile as investors, market makers and institutions fight hard to close down positions on a profitable note. That additional competitive buying and selling pressure can send prices all over the place making it harder for the casual investor to participate and take decent profits. |
ARTICLE RESOURCE: To learn more about trading and learning the foreign exchange market, visit Learn and Trade Forex.com. Read Optimal Trading: When to Trade the Forex. |
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