Forex is always open, but is it a good idea to trade 24 hours a day?
The purpose of currency trading is to make money by speculating on fluctuations between categories. Price changes tend to occur only during very active trading sessions.
It is important to know the hours during which the foreign exchange market is actively traded by major forex players. To determine the best trading hours, one must look at the four major forex trading sessions that take place in Tokyo, London, Sydney and New York.
It is particularly interesting when two trading sessions are active. There are several times throughout the day where two trading sessions will overlap. For example: in the summer, between 12:00 GMT and 16:00 GMT, markets in London and New York are open at the same time.
Periods where London and New York trading overlap are very active. At this time, the liquidity and volatility of currency pairs are excellent. European trading hours are there before more active than the American or Japanese sessions. In second place, the New York market also generates a lot of activity. The Tokyo session is not very interesting, as volatility is very low.
Personally, I trade the European session. It's my favorite of the forex trading sessions . Of course, you may think this is because I live in Europe, but this is only half of the answer. Yes, it is convenient for me to trade my session as the hours closely match what you may refer to a normal "work" day, but the fact is that the London session is where the big bucks are to be made.
As soon as London opens, boom, within the first 15 minutes you start to see the volume. It's tempting to believe that the initial direction will define what happens during the rest of the day, but the reality is that the market often reverses during the beginning of the session. It's also quite common for the overall direction to swing several times during the day, so be cautious about jumping to conclusions.
One last thing, avoid trading at the end of Friday, when the US market winds down, volume sharply drops, spreads widen and it is increasingly difficult to grab pips from the marketplace. However, you can often use the tail end of Friday's movements to guess which way the market is going to move once Monday rolls around.
As long as your money management strategy is in place, you're good to go!
Source by John Caricaburu