Wednesday, May 30, 2012

The Forex Market Hours - Know Where the Profit Lays

One of the unique characteristic of the currency market or forex trading is it is open 24/5 for five days from Monday to Friday. It will start Monday morning in Asia and will close Friday afternoon US time.

There are three major time zones in forex trading namely the Asian session which starts at Sydney, Australia open (10:00pm GMT) then followed by the Europe or London session (6:00am GMT). The Asian session overlaps with the London session for about two hours which adds volume to the close of the Asian session as it closes with the Tokyo, Japan close at 7:00am GMT. The US opens at 12:00pm GMT with the New York opens and overlap for four hours with the London session as the London session closes with London, Great Britain close at 3:00pm GMT, this session is known to be the most traded hours in the currency market,  the volume and the market volatility is at its high. Then as the US session closes (8:00pm GMT) the Asian session gets ready to open again (10:00pm GMT) and the cycle continues from Monday to Friday. This is also why most excellent forex brokers offers 24/5 support.

There are also four major market center in the currency market or forex trading considered and follow. Starting with the Sydney, Australia market open followed by another Asian market open at Tokyo, Japan, then the Frankfurt, Germany open followed by another European market London, Great Britain open and finally the New York, United States market.

Since volume and volatility rises to its peak levels during the London and US session overlap it is considered the best time to trade forex. This is a good opportunity since prices moves faster and the liquidity or volume is at its peak. You should watch the following currency par during this session; EUR/USD, GBP/USD, USD/CHF and GBP/CHF. You will have to wake up early in the morning or stay up late at night depending n your time zone to trade these hours.

The Asian session and London session overlap is not to be avoided over all, although the volume during this time is no match compared to the London session and US session overlap, it is a great time to anticipate and take a position for possible price action influenced by the US session closing.

One of the strategies you can apply using your understanding of the forex time zone is trading the news. As the news become public some of the market traders or participants will not be able to trade due to their local time zone. Your anticipation of the market price in relation to important and vital news will be profitable for those traders who knows how to trade the news and knows how to do gap trading during the first day of trading coming off the weekend.

It is good to plan your trades with a high degree of consideration to the currency market hours or forex trading hours but it is highly recommended to set regular hours in your local time zone to trade forex. Since forex is open 24 hours a day, five days a week it might turn you to a zombie if you trade without proper consideration to time.

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