Choosing the best time to trade Forex
Observant traders will notice the direction in which a currency pair is moving, because the analysis of the trades helps to make correct conclusions, and there is a certain tendency, after studying it, it becomes clear which days of the week, and at what hours there are good swings, on which a trader can make good profit.
On what is this focus formed? First, the end of the week in the U.S. stock market is marked by some events in the movement of the currency, which eventually gives a jolt to the fluctuations, which gently move into Monday.
Traders buy and sell currencies with short-term gains from the fluctuations every minute, hour after hour and day after day. Almost 90% of all currency trading is speculative in nature.
Forex activity often operates on a regional currency block basis, with the bulk of the trading taking place between the USD block, the JPY block and the Euro block, representing the three major economic areas. Almost 75% takes place in the so-called major currencies, which represent the largest economies in the world. These are the major currency pairs: EUR/USD, GBP/USD, JPY/USD and CHF/USD.
At any given time, dozens of global financial centres, such as Sydney, Hong Kong, Tokyo or London, trade currencies and actively participate in the market fluctuations. The forex market is open and active 24 hours a day, starting Monday morning from the Asia-Pacific time zone until the Friday business hours close in New York.
Trading begins on the New York Stock Exchange at 9:30am and continues until 4:00pm. However, in the forex market, there is no official start time for the trading day, or the week. But for everyone, the market starts when Wellington, New Zealand’s first financial centre, opens on Monday morning local time. This roughly corresponds to Sunday afternoon in the US, Sunday evening in the EU, and early Monday morning in Asia.
Unlike other financial markets, foreign exchange markets see around-the-clock action, except on weekends. Foreign exchange markets are open 24 hours, 5 days a week. Resumption of trading begins after the Friday trading close in North America. This is the first chance for the currency markets to react to news of events that might occur over the weekend. Prices may close in New York trading at the same level on Friday, but they could start at a different level after Sunday.
After all, the Asian session opens in Tokyo at about 5 p.m. New York time on Sunday afternoon, and here the non-stop Forex trading begins, going into the European trading session around 3 a.m., and then it heads into the American session, at 8 a.m., and while it makes a full circle back to the Asian trading session without stopping, a trillion and a half dollars are scrolling through the market, and it repeats itself every day. And so, when traders learn the latest news about what has happened, they rush to take advantage of it before it becomes known to the majority of the world’s population, and once it is publicized, the level of trading can change dramatically.
Thus, it can be concluded that the peculiarities of trading by the days of the week are very important for traders, and therefore it is necessary to follow the events on Friday evening, Sunday evening and Monday morning with special attention.
