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Best Times To Trade Forex

Forex is a 24-hour market covering different time zones. It starts at a place called Wellington in New Zealand on Monday morning at 8am local time. This corresponds to 8pm GMT, 9pm BST and 4pm EDT. The market, which starts on Monday, shuts down for the week at 4pm EDT on Friday. BST stands for British Standard Time. EDT is Eastern Daylight Time, USA. The forex markets after starting at Wellington, passes through several prominent cities and time zones, like Sydney in Australia, Tokyo in Japan, then on to Singapore, Frankfurt and London and finally ending in New York and Los Angeles. You could always check your local time at timezone convertor.

When can you set up a profitable trade in the forex markets?

That’s the key question you must be asking yourself always. As a matter of fact you could be setting up a trade in any one of the major trading sessions. This could be Asian, European or US sessions. Keep looking at the historical price data on forex charts. That could possibly give you a clue as to what time of the day you should be watching the markets. The maxim you should always follow should be to trade when the average trading range was significant. Do not trade if the price were oscillating in a narrow sideways range.
Asian markets are usually open from 2200 GMT to 0600 GMT. Please remember that the volatility in the Asian trading session is usually low. Nevertheless you could expect some good moves to occur with the USDJPY being the most active pair followed by EURUSD and EURJPY in that order.
European markets are open from 0600GMT to 1400 GMT. Be prepared to watch the EURUSD having the maximum trading volume in the European session followed by GBPUSD, USDJPY, USDCHF and USDCAD in that order.
The New York and North American markets are open from 1200 GMT to 1900 GMT.
New York is obviously a large forex market. You could expect to see it at its busiest best from 8am to noon EST. Any news releases during this period could result in an extremely volatile market. So you got to be careful here.

So what is the best time to trade the forex?

That is not a difficult question to answer but does depend on what you have in mind. If you look at the maximum trading volume per currency, you could naturally trade the USDJPY in the Asian trading session, the GBPUSD in the European session and EURUSD both in the European and N. York sessions. This is only one approach to trading the forex, but not the only approach. I guess you should be asking yourself a more appropriate question and that is what is the best time frame to trade forex or rather, which is the most profitable time frame in forex trading? Remember time and time frame are really not the same. There is a great deal of difference between the two. While you know the meaning of time by itself, time frame means a particular period in time. While each time frame reveals the same data, it is just that it occurs in different intervals. For example, you could have a time frame of 1 hour, 1 day, or 5 minutes. As you are beginners in forex trade you could get a feel of the market by trying out any of these time frames.
Now lets examine each of these time frames. Lets take the 1-day time frame for instance. Out here, each price bar represents one day, and so a change in the chart will be observed once a day. Lets now take the hourly time frame. Naturally you would expect newer price bar to appear every hour, which means having more data on the charts for analysis. Similarly a 5-minute price chart simply means newer price bars appearing every 5 minutes. In this chart, you would notice quicker changes than the others. As a matter of fact, every time frame can be traded successfully.

What time frame would you trade?

It simply depends on your needs and profit expectations. What about a 5-minute time frame? If you settle for this, you would have to monitor a 5-minute chart every 5 minutes several hours a day. That can be very tiresome. Besides you would have to be pretty quick taking decisions with a 5-minute chart. Or you could settle for the 1 hr chart if you feel there isn’t much point in breaking your head on a smaller time frame. Still further, you might start thinking there is not any point in profiting from intra-day changes in the market. In which case you can forget using the 5 minute and 1 hour time frame currency charts because that’s not the time frame you are interested in. They are not the ones for you. You now want to take trading positions keeping it open overnight, which means you want to make your money work even when you are asleep. Of course the daily chart is the right one for you now. So now you know, when and in what context you would be using the 5-minute, 1-hour, and daily time frame currency charts.
Now in a 5 minute time frame price range is smaller, and you could easily tell when the market starts turning against your position. So you can cut your losses quickly, but the profits you could make in a 5 min time frame would be small. Using hourly time frame currency charts would mean wider price ranges, and so naturally you would put wider stops. And supposing you are on the wrong side of the trade you would have to face bigger losses. The same is the situation with a 1-day time frame currency charts. So the choice is really yours depending on the time frame you choose. You could have smaller profits and smaller losses, starting from say a 5 min time frame to larger losses and larger profits on a 1-day time frame. So it is not just choosing a time to trade that matters, it has also got to do with choosing an appropriate time frame to trade no matter which time you choose to trade, day or night.
So start trading with a single time frame, test your skills there and if you find results are good then it is fine. Remember the more higher the time frame the more importance it carries as for instance an 1 hr time frame is more important than a 5 minute time frame and a daily time frame is more important than a 1 hour time frame.

What is the best way to trade a particular time frame?

Supposing you are trading on a 5 min time frame, the best approach would be to start with a even higher time frame say a 4 hour time frame, then conduct the analysis on this time frame by finding out the major trends and turning points. Now drop a step lower conduct the same analysis keeping in mind the 4-hour time frame you just analyzed. Finally descend to the original time frame you had chosen i.e. the 5 min time frame, and identify trading opportunities there based on what you learned in the higher time frames. The busiest times to trade the forex markets are 3am to 11am EST. Even if you trade 2 hours using the 5 or 10-minute time frame during this period you will be making quite a bit of money.

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