The Best Time to Day Trade the Forex Market
The current market share of the major trading centers are:
- London: 30%
- New York: 20%
- Tokyo: 12%,
- Zurich: 7%,
- Frankfurt: 7%
- Hong Kong: 7%
- Singapore: 7%
- Paris: 3%
- Sydney: 3%
The three major forex trading sessions are as follows (all in
Eastern Standard Time):
- London open 3:00 AM to 11:00 AM
- New York open 7:00 AM to 4:00 PM
- Japanese/Australian open 7:00 PM to 3:00 AM
The New York and London trading sessions together comprise a 50% market share of forex transactions. Their sessions overlap between 7 and 11 am EST. During this time, volatility is much higher and trading opportunities are much more frequent with bigger moves.
The best continuous eight hour period is during the London session, from 3 AM TO 11 AM EST. The currency pairs that move the most during these hours are USD/CHF, then GBP/USD, then EUR/USD, then USD/JPY.
Trades of 30-100 pips can be made in a few minutes or hours, using popular strategies in any time frame,
especially around news releases, which frequently occur at 8:30 AM EST. If you place a trade in anticipation of an announcement, it is important to have your stop loss in place that can be executed because volatility can be very high at this time. Some FOREX brokers do not guarantee their stops during fundamental news release times due to the extreme volatility. You can possibly encounter several things during news release times: whipsaw of the price,
slippage, freezing of the platform, disconnects, re-quotes of price, loss of money, etc. It is a buyer-beware type of situation. If you choose to play the news, you have to be aware of it's risks. The rewards can be very great in just a few minutes, or it can go against you. Some traders watch the 30 min. chart instead, to determine the major trend, and trade at the appropriate time in the first 5 to 15 minutes to ride that major trend.
There are several websites where you can get forecasts and news release times for the day, such as http://www.fxstreet.com, http://www.forexnews.com, and http://www.fxstreet.com.
Technical analysts will watch the impact of the moves on support/resistance lines, trend lines, trading range, and target highs & lows, during these volatile times.
When you are analyzing potential option positions, it
helps to have a computer program like Option-Aid that
swiftly calculates volatility impacts, probabilities,
statistics, and other parameters of interest. These
programs can pay for themselves with the first trade that
they help you with.
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