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Best times to trade FOREX
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Everyone wants to know "What are the best times to trade FOREX", especially by those who're relatively new to FOREX? It's a fair question because those asking it have not yet arrived in a mentored trading room, that is scheduled around the best times to trade or, they are not familiar with the different currency pairs, which depend largely on the location and time zones of where these currencies originate.
The best times to look for trades using DAY trading technical criteria include times of news announcements, market opens and when the major players move their money - all which cause the market to move. Central banks of countries are the major players in the FOREX market, and their lesser banks such as the large investment banks. Banks are run by bankers, who are people, have people habits - like eating, sleeping, brushing their teeth, going to lunch and leaving work early on Fridays to beat the traffic. Bankers perform many rote functions which repeat, therefore they create repeating patterns which can be observed and predicted to some degree.
Bankers get to work at predicable times; they move money around in the morning hours, then they go to lunch. Being bankers they can usually take a longer lunch; not much happens regarding "moving money" during their extended lunch time. After lunch more money is sent here and there. Bankers go home at respectable hours to have dinner with their families, so money is not being moved during dinner, as banks also close at predictable hours. Banks move money when it is convenient (and predictable) for bankers to do so. Thus these actions form habit patterns. Habit patterns can be observed and identified on currency charts. Some of these patterns are created by bankers!
I know this sounds rather infantile, but it's a factor for the answer to the question "when is the best time to trade?" This is transparent based on the predicable actions of bankers, where the bank is located (the major financial centers) and what time zone those banks are in. If you know what banks are moving which currency, where the bank is located in the world, study the patterns formed, and take into account bank and market openings, you can answer the above question fairly accurately. Of course there are random factors that contribute to this issue, such as news announcements, however what the major players do and when they do it is germane to the equation.
Major financial centers: in the US - is New York and Chicago, mostly New York as this is where the NY Stock Exchange is located physically. In Europe - is London (UK), Munich (Germany) and Zurich (Switzerland). This is where the money decisions are made and where the banks are located that make those decisions. In the East - Tokyo (Japan), Sydney (Australia) and to somewhat a lesser degree, Wellington (New Zealand).
Per the world time zone map you have these financial centers in their various time zones operating on a 24 hour a day basis. Wherever you are located there is a bank someplace in the world about to move money. However the FOREX market is not accessible to the public on the weekend, wherever you are, because the brokerage houses, who give you the software (trade station - that allows you to access the FOREX market) closes for the weekend, as they too have "business habits". The banks and brokers agree to take a break on the weekend to service their computer servers (except for Sunday night which is also Monday somewhere in the world!).
Optimum trading times should cover the busiest trading periods for the major financial centers of the world. These usually also correspond to market openings in the various countries, the times of major financial news releases announced on weekly economic calendars and random Geo-political events such as a terrorist attack or natural disasters that effect economics, that are unforeseen.
In Europe these times would be 1:45-5:00 AM EST (banking in Zurich opens at 1:45 AM EST, in Munich at 2:00 AM EST, in London at 3:00 AM EST. News releases are usually seen between 2:15-4:30 AM EST). In the US this would be 8:00-11:00 AM EST (banking in NY opens 8:00 AM, major news releases at 8:30 AM and the NYSE opens at 9:30 AM EST). In Asian, 7:50 PM - 1:30 AM EST (the Tokyo Stock Exchange opens at O:00 PM EST and again at 1:00 AM EST, banking in Tokyo open at 9:00 PM EST, News releases at 7:50 PM, 1:00 & 9:30 AM EST. Hong Kong Stock Exchange opens 11:00 PM EST and the Bombay Stock Exchange opens at 12:25 AM EST).
Daily bank openings, market openings, economic announcements, Geo-political events and the times mentioned above that banks move their money all contribute to the global picture of 3.2 trillion dollars moving through the FOREX market and why. This picture can be better understood by understanding each of the parts herein and their advantages.
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