The foreign exchange market, also referred to as forex, happens to be a globally decentralized market. To make some profit in the forex market, you have to be mindful of the time during which you decide to trade. Visit multibank group
The forex market tends to be very active when the trading hours of multiple countries or regions overlap. When trading activities are very intense, trading spreads rapidly. In other words, the gap between bid prices and ask pricesbecomes narrower. During these times, the volume of money going into the market becomes lesser. Because of this, traders get the opportunity to maximize their profits.
Important Forex Markets
Four of the most important foreign exchange markets in the world are London, Tokyo, New York and Sydney. It is important to remember that these four markets have different trading hours. To maximize your profits as a trader, you must find out when the trading hours overlap each other. When there is an overlap in trading hours, the market becomes extremely volatile.
Good forex traders memorize the important trading hours. They, in particular, give a lot of importance to the hours when two different exchanges overlap. If more than one market happens to be open at the same time, both the trading volume and the volatility of the market increase. In the forex market, volatility refers to the extent to which currency prices or equity undergoes a change.
It is interesting to note that a large number of investors are scared about market volatility owing to the risk involved in it. However, forex traders look forward to being in a volatile market as it enables them to earn a high profit.
Forex Market Hours
The forex has been designed as an electronic system and remains operational between Sunday 5 p.m. and Friday 4 p.m. Eastern Standard Time (EST). You must remember that each region serves as a base for important exchanges featuring distinctive trading hours ranging from Monday to Friday.
When you speak to a trader, they will list out four important time windows. For London, the best time window is 3 a.m. to 12 p.m.The most lucrative time window for New York tends to be 8 a.m. to 5 p.m. For Sydney, the best time window happens to be 5 p.m. to 2 a.m. the most appropriate time window for Tokyo is 7 p.m. to 4 a.m.
Though each exchange operates in a different manner, they largely trade identical currencies. What this means is that when exchanges in two different markets are open, one can witness a sharp rise in the number of traders purchasing and selling a particular currency actively.
The bids and asks taking place in a particular forex market exchange have a direct impact on the bids and asks carried out on every other open exchange. This results in a reduction in market spreads and an increase in volatility.
There are certain times during which two or more markets overlap each other. For instance, the London and New York market remain open from 8 a.m. to 12 p.m. The window during which the Sydney and Tokyo markets remain open is 7 p.m. to 2 a.m. The Tokyo and London markets remain open between 3 a.m. to 4 a.m.
What The Investors Say
Many investors are of the opinion that the best trading time is between 8 a.m. and 12 p.m. This is the same hour during which the London and New York exchanges overlap each other. It is important to note here that these two trading centers serve as a platform for almost half of all the forex trades taking place in the world.
As far as Sydney and Singapore exchanges are concerned, trading activities take place most intensively between 5 p.m. and 6 p.m. The volume of trading on the Sydney and Singapore exchanges is much lesser as compared to the London and New York exchanges.
When it comes to trading hours, there is always some space for exceptions to be made. The excepted trading volume, after all, is driven by the assumption that no important information or update shall come to the fore.
Trading volume and volatility in the market are mostly affected by unexpected news that causes a shift in the financial markets. Apart from a military crisis, political disturbances, too, can bring about a sudden change or spike in the trading situation in the market.
While economic data or information has the potential to create a movement in the market, there is a certain release schedule that one associate with it. Usually, it doesn’t come out of the blue and disrupts the market.
Most of the economic data reports revolve around factors like consumer confidence, employment figures, consumer consumption and Consumer Price Index or CPI. When you are trading, you must be aware of the schedule that has been put together for the release of economic reports. By using this information properly, you can maximize your profits.
Risky Hours
No matter which hours or window you choose to trade, you will have to deal with a certain amount of risk. If you are a novice trader and have just started exploring the markets, this is one of those things you ought to remember. Know more holiday hours notices – multibank group
As a forex trader, it is imperative that you exercise caution while taking each and every step. The high leverage rates associated with currency trades range from 1,000 to 1. Traders get a lot of opportunities to make a good profit owing to this ratio. However, there is also a great amount of risk involved in it. A single trade might result in you losing your entire investment.
Apart from choosing the right trading hours, there are a few important things you need to keep in mind when you trade. Forex traders or investors, who have just stepped into the market, should look seriously at the option of opening accounts with companies that provide them with demo platforms. This enables you to practice trading for a while without the risk of losing your investment.
