By: Terry Allen
Forex has long trading hours operating twenty-four hours a day from 5:00 pm EST Sunday to 4:00 pm EST Friday. Forex is the most active market in the world and each day trading begins in Sydney and then circulates around the planet passing first through Tokyo, then London and finally New York.
You will have many opportunities during this significant time period to activate trades and hopefully secured profits. However, you will also find that this activity can be exhausting both physically and mentally especially from trying to identify the opportune moments for entering high quality trades.
You also cannot trade all these hours as well unless you have assistance or an automated solution. You simply must sleep at some time. Consequently, you must take measures to identify the key times when the best opportunities are most likely to arise.
You can achieve this task by studying the relationship of Forex volatility to its trading patterns over its twenty-four hour trading cycle. You should also take into account the fact that Forex is very much an international or global business that encompasses every country in the world.
If you undertake such a study, then you may be able to deploy and optimize the usage of your daily trading time.
For instance, you know that US dollar transactions account for the lion’s share of all those conducted on Forex. You also need to realize that the USA posts between 30 to 50 major economic data releases a month that can significantly affect the performance of the USD against the currencies of other countries.
Consequently, you should benefit by recording all the scheduled times and dates of these releases in Eastern Standard Time (EST). You should also note that the US Stock Market opens at 9:30 am EST and closes at 4:00 pm EST daily on each weekday. Consequently, you may find it helpful to note these times because the amount of trading activity that occurs between them is generally significantly higher than that associated with other periods.
Although Forex is independent of the Stock Market, they do have a strong correlation. For instance, if the Dow Jones Index falls, then so normally does the higher-yielding currencies, such as the Euro and British Pound.
You could also study which market zones record the most trading activity. You should concentrate on the three major areas which are the Far East, Europe and North America. Once you have gained an understanding of this information, you will then know how to focus your own trading hours more accurately.
When I first started trading, I tried using alerts to inform me about new potential trading opportunities twenty-four hours a day. After a few months, I was so tired that I did not know what day of the week it was.
To conquer such problems, you must preserve your time and energy so that you can trade comfortable over the long haul without suffering declines in your concentration. You can do this by gaining an astute understanding of the global trading patterns conducted daily.