Financial Freedom With Forex Trading And Mining: Tips For Montreal Residents – Today I will tell you when is the best time to trade forex and which trading strategy to use depending on the time of the trading session.
I think everyone who has ever thought about trading in financial markets wondered about stock exchange business hours or Forex business hours. Unfortunately, there is very little attention paid to this issue in the regular training courses that can be found anywhere on the internet or taken at a brokerage firm.
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However, the opportunity to make money on the stock exchange directly depends on such a parameter as trading time. If the trading session is closed, the market will be inactive and there will be no opportunity to open trades and make money on them. So, let’s find out when Forex trading sessions are open.
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I will give answers to these and some other questions in this article. The main question here is when and how one can reach the market.
Every country has a stock exchange, or more accurately, the largest stock exchange in each part of the world, and each operates on its own hours. Below is a list of the world’s largest stock exchanges. I’ve also indicated their business hours using the common world standard UTC/GMT 0:
So, one can work on the stock exchange during the day while the stock exchanges are closed at night. For example, if you are in the Asia region, you cannot trade on the NYSE during the day. You will have to be satisfied with the local stock exchange TSE. Sure, the world is used to this and it doesn’t cause any inconvenience, but there are some cases when one needs to have 24-hour trading access urgently. I can easily recall a situation in 2008 when most investors on US exchanges were holding positions and learned of the beginning of that famous crash after trading closed translation. Naturally, they cannot do anything and simply do not have the opportunity to destroy their assets. They just had to wait until morning. Then the trading session opens in the morning and quotes are given with huge price gaps (30% or more). If the stock exchange does not close at night, they can sell their assets at a smaller loss.
The price gap between the closing price of the previous period and the opening price of the new period can occur not only in times of severe volatility. On stock exchanges, price gaps due to trading halts are normal and occur before almost every trading session opening.
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The image above is an example of a gap occurring on the APPLE stock chart. The difference between the closing price and the opening price is up to 20 points, which is quite a large gap for an asset. Due to the nature of such work, traders who use short-term speculative strategies often face surprises that can be quite costly.
The main thing that distinguishes Forex from a stock exchange is decentralization. That means one does not need to be “linked” to a certain place and time to be able to access trading activities. Unlike stock exchanges, Forex operates 24 hours a day. Why? Because its operation is guaranteed by global banks, anywhere in the world and in every time zone. The round-the-clock operation of the currency market is provided by 4 consecutive forex trading sessions:
I need to mention something important here. Opening and closing times correspond to current winter times. When the clocks switch to summer time, class schedules will move forward 1 hour.
Trading sessions follow each other and may even overlap. That is why the Forex market is open 24 hours a day. A parameter like volatility depends on which sessions are currently open. Volatility shows the amount of price movement per unit of time and varies between sessions. The region of the world where most traders reside and have the largest stock exchanges have the highest volatility. In addition, the volatility of a particular instrument depends on the regional interest in the instrument. For example, AUD (Australian dollar) is most actively traded during the Pacific session.
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However, Forex’s 24/7 operation does not mean that it never closes. It does, on weekends. Saturday and Sunday are normal holidays in Europe. On these days, the market is closed and trading is not possible. The market closes at 23:59 on Friday and opens at 00:01 on Monday. Gaps similar to those that occur on a stock exchange are often noted at the opening of a Forex trading session.
We see that only the Asian session is open in the morning while Europe and America are closed. Naturally, there are very few people interested in trading these currencies, which is reflected in the minimal price movement (gray area). Another example is when the European session opens. The price starts to fluctuate more actively and the volatility doubles and more. So, if your strategy implies operating in low volatility conditions, you’d better trade this pair when Europe and Americas close.
How to decide when is the best time to trade Forex if each session has its own characteristics? Let’s look at the characteristics of each session and determine if there is a good time to trade Forex.
As you know, the demand for the national currency increases when the trading session opens in this country. For example, trading volume in yen increases during the Asian session because at that time Japanese companies buy and sell currency pairs against the yen to do business with companies in other countries. Demand for the Euro is increasing during the European trading session. At night trading slows as European companies close and business with other foreign companies is dwindling.
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As you can see, you can make money from Forex at any time. So, there is no best time to trade. Traders can choose the most suitable time for them depending on the currency pair and the trading strategy they use.
However, there are some recommendations on when to trade. At the time when sessions overlap and important financial news is announced, volatility in pairs increases, which requires the trader to be very attentive and react promptly when opening new positions. , because at this moment the price can suddenly change the direction of movement. It is important to know the timing of major economic events to avoid trading during periods of high volatility as the risk of loss is significantly increased. During holidays, trading activity is often low.
Information about the timing of trading sessions and other fundamental factors is just as important to the trader as technical tools.
The trader chooses a broker, opens an account and deposits money. Then he/she can start trading in the market. What are the principles of online trading? A broker is an intermediary that facilitates transactions. When a client signs a contract with a broker, he or she receives a trading account and access to the software to execute trades.
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The trading terminal displays current quotes of all trading assets and has a comprehensive set of technical analysis tools on price charts.
After analyzing and making a trading decision to open a trading position, the trader will issue a trading order with a specified volume to the broker. Volume in Forex is calculated in standard lots of 100,000 units of the base currency. Volume depends on the type of trading account. Many brokers offer to open micro accounts, which allow traders to trade with the lowest possible volumes.
After opening a position, the trader waits until the price reaches the desired price level to close the position and take profit. The difference between the opening and closing prices is calculated in pips and you will make a profit. Knowing the value of a pip, the trader can calculate his profit in cash terms.
Overtrading is a common pitfall that many investors and traders fall into, especially in the financial markets. It refers to watching the chart for as long as possible in the hope that a good trading opportunity and entry point will appear in the near future. However, as practice shows, excessive trading is more harmful than helpful. Trading is associated with analytical decision-making, which means it requires a high level of concentration. The longer a trader looks at the screen looking for a trade setup, the less focused they become. In such a state, maximum coordination becomes impossible and the trader will make typical mistakes. They open excessively long or short trades due to emotions, impulses or an insatiable desire to make quick profits; traders ignore essential details and frequently change trade direction.
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To maximize profits and take your trading strategy to the next level, you need to consider an important parameter like time.
Although the foreign exchange market operates 24/7, trading activity and strong price fluctuations only occur during specific periods of time. In this time
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