When To Do FX Trading
Appeal
For a start the FX market is huge, transactions exceeding trillions of dollars a day, this eclipses all the other markets. This provides a huge amount of liquidity to trade forex in relation to other markets i.e. traders taking the other side of the trade. Now I often hear how the fx market is open 24/5 true, however there are some specific times that attracts new money, participants, to enter the arena in large volumes i.e. Tokyo banks opening, then Frankfurt, followed closely by the largest market London, accounting for around 80% of the trades!
Timing is Everything
As a trader you need to be putting your money to work at the best times i.e. new investors will be coming into the forex market and hopefully seeing the same things that you are, for e.g. a double top at a strong overlapped resistance zone, at the London open will often be a good place to see an opportunity to trade forex.
Enter Now Or Later
The logic is simple if a currency pair has been climbing all night from, let's say the Tokyo open, then who wants to invest at the top of a move, obviously the move can keep going, however speculators will usually wait for a retracement to enter at a better price. This usually follows, as in our example the Tokyo traders probably have had a profitable session and are waiting to go home, as trader if you had a successful day you're likely to do two things, close the trade or take a portion of it and bank it, this will lead to the currency falling. Now if the move to the upside looks like it hasn't reached defined targets yet, then often traders will attempt to push the pair back up after a pullback, and this is when we find out if the move is real or not.
Newbies
Often newbie investors coming into to trade forex and are quite bewildered by why the price has sharply dropped after a powerful move. Put yourself in the place of new traders entering the forex market and ask yourself do I want to be buying at the "temporary end of a move" because you are opening yourself to bad odds if you do, and that is never in a speculators best interest for fx trading. Sometimes the hardest thing to do is accept that a trade has started and you're not part of it, it stinks but it's part of Fx Trading I'm afraid.
And Now
The main thing here is to alert you to the best times and when your opponents are likely to enter the currency market to trade forex and how fresh traders will analyse price. No matter what, all charts will show you one thing, what the currency has done and where it is exactly at the point you look at it. To trade forex successfully you have to see the market as other traders do, that way you'll make a huge jump forward in your ability to trade forex, but this is just the tip of the iceberg.
When To Do FX Trading
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