Industry

When not to trade Forex

When NOT to Trade Forex Save your money and keep your nerves by not trading at the wrong time. While it is crucial to understand when is the best time to analyze the charts and make the bids, it is equally important to know when NOT to open positions. There are two main characteristics of bad timing: Low activity in the market Chaotic direction of trades An inactive (often called “thin”) market offers smaller movements of rates, thus smaller potential profits. A thin market also comes with higher commissions (spreads) for each trade due to the decreased liquidity. In simple words: if you want to sell a currency, it is harder to find potential buyers, so the commission goes up. A good example of chaotic trading is shortly before, during and shortly after important news events. In these times of uncertainty, the currency rates can swing wildly and unpredictably, thus messing up trading by creating execution lags, triggering stop-loss orders, etc. So here are some examples of when you should at least be careful when trading: Friday afternoon & weekends The activity usually slows down in the second half of Friday mainly because the big banks and hedge funds are closing their positions for the weekend. This is mostly done for security reasons; they don’t want to have their large positions left open without sufficient supervision. The biggest risk of leaving positions open for the weekend is called “the weekend gap”. When bigger rate swings occur while the systems are not recording them, the stop-loss orders might not be executed correctly and can create problems. That’s why most traders don’t leave open positions over the weekend. Trading session closing time When the trading sessions are closing, the rates and liquidity can swing wildly resulting in slips, high spreads and overall losses. Important news events Traders should avoid trading when major economic numbers are released (central bank announcements, monthly employment reports, etc.) as these events can move markets in unpredictable directions and create risks if the news differs from the previous direction/sentiment of the overall trend. That’s why we are checking Economic calendars regularly to avoid such situations. Bank holidays Trading usually slows down during the major holidays. So before trading, it is wise to mark on your calendar the major holidays of the countries whose currencies you plan to trade. Primetime TV events World championships in football, NBA, NHL, Superbowl finals, The X-Factor, etc. can create the same effect as the holidays. We won’t find these events in the economic calendars, so a TV program guide can also be a useful tool for a trader. Asian sessions Traders, especially beginners, should be careful trading during the Asian sessions as their market activity is usually low relative to the major sessions. This results in higher spreads and smaller average gains. When angry or frustrated A golden rule of trading is to stop trading when angry or overly excited. Trading during elevated emotional states usually ends badly because it affects people’s mental sharpness. You must be calm and collected when trading. Overnights Many forex brokers charge fees for leaving the positions overnight. Check your broker’s policy on overnights before trading!

2022-09-24 00:53 United Kingdom

10

5

Industry

When to trade forex

Forex trades are carried out from different time zones all over the world so the market is open 24 hours a day giving traders the freedom to choose when to work. But is it truly active and profitable all the 24 hours? No! Quite often, beginners are misled by the fact that currency trading happens at all hours so they start trading in times when nothing happens as it should. There are specific times when the activity and liquidity peaks...and these special times are when the most active sessions overlap. During the overlapping of sessions, the flow of transactions and money is the highest, thus fueling the currency fluctuations and forming notable trends. Knowing the best time for trading is critical for success. In this section, you will learn when the best market hours of the day are for trading, which day of the week is the most productive and which trading sessions are considered to have the most potential. 3 Golden nuggets of forex timing Busiest session The busiest session of all is the London (Europe) session. 30% of all trades happen during this session. Session Overlapping The best hours for trading are during the overlapping of the major sessions. The most important one: London/New York. The most active days The most active time of the week is from Tuesday to Thursday. Best times of day for trading The most active trading sessions are in London and New York, so the highest market liquidity is when these sessions overlap, as both continents are online and actively trading with each other. The most active trading sessions are in London and New York, so the highest market liquidity is when these sessions overlap, as both continents are online and actively trading with each other. This creates big fluctuations in the currency prices, opening more notable opportunities for making gains. Keep in mind that during the last minutes of London’s session, the currency swings can become quite chaotic and thus, harder to predict. The opening of London’s session is also very active and lucrative as it overlaps with the end of Tokyo’s session. The third major overlap happens between the Sydney and Tokyo sessions. Still, this time is less liquid than the London/NY sessions as it is late evening or night in the rest of the world. Best days of the week for trading Now you know when you should be watching or reading the daily news from around the world and when to analyze the charts, what about the best days of the week? Are all days equally good for trading? While there can be breaking news that disrupt the average weekly flow, there is a pattern that works most of the time when there are no force majeure events. As shown in the picture above, businesses are coming back from the weekend so the week starts out at a slow pace; but it doesn’t mean you can’t trade on Mondays. The most active days are in the middle of the week, usually on Tuesdays and Wednesdays. Fridays are usually active only during the first half of the day. On Fridays, the last hours that day can sometimes be chaotic so it’s best to avoid trading then. Just remember that you don’t have to trade all of the sessions. It is neither sustainable nor productive in the long run. Instead, you should choose the most suitable time frame to match your daily rhythm like and share for more post update

2022-09-22 23:55 United Kingdom

12

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IndustryWhen not to trade Forex
Forex_Captain

2022-09-24 00:53

IndustryWhen to trade forex
Forex_Captain

2022-09-22 23:55

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