ORGANIZING FOREX TRADING SCHEDULE

Novice forex traders tend to monitor several economic calendars and trade on every data. Yes, the foreign exchange market is open 24 hours a day, five days a week. But it does not mean one should trade all the time, for this can cause too much stress and deplete capital quickly.

So, if trading all day long is not the key to succeed in the currency market, what should a trader do?

Organize a trading schedule. The first thing every forex trader should do is to know the four major markets. The week starts on Sunday at 6:00 p.m. EST and ends on Friday at 4:00 p.m. However, these markets do not open and close simultaneously.

• New York (8:00 a.m. to 5:00 p.m.) – Foreign investors heavily trail this market because the US dollar, the global currency, is involved in almost all trades. Any movement in the New York Stock Exchange can immediately affect the currency.
• Tokyo (7:00 p.m. to 4:00 a.m.) – Taking the largest chunk of Asian trading, this was the first Asian trading center to open. USD/JPY is the best currency pair to trade the Bank of Japan can substantially influence the market.
• Sydney (5:00 p.m. to 2:00 p.m.) – It is the smallest among the four key markets, but several initial actions are seen when the markets reopen on Sunday afternoon since traders attempt to stabilize following the action that may have taken place since Friday afternoon. This is where trading day officially begins.
• London (3:00 a.m. to 12:00 noon) – The United Kingdom dominates the forex markets worldwide, with London being its main component. Known as the world’s trading capital, London accounts for almost 34% of global trading and has a huge effect on currency movements because the Bank of England is situated in the city. Not to mention forex trends frequently originate in London.

The best time to optimize the market is when the market is most active, specifically when there is an overlap in trading times between open markets. Remember, overlaps are tantamount to higher price ranges and greater opportunities.

• Sydney/Tokyo London (2:00 a.m. to 4:00 a.m.) – Although not as volatile as other overlaps, this can give an opportunity to trade during high pip fluctuation. The EUR/JPY is the ideal pair for this period.
• London/Tokyo (3:00 a.m. to 4:00 a.m.) – Minimal actions happen in this period because of this time and the one-hour overlap renders little opportunity to trail big pip changes. Also, most US-based traders are not awake during this overlap.
• US/London (8:00 a.m. to 12:00 noon) – It has the heftiest overlap within the markets occurring in the US/London markets. Over 70% of all trades occur when the two markets overlap because the euro and the US dollar are the two most well-known currencies worldwide.

While arranging forex trading schedule is a big help, traders should not forget the news release. Such events can significantly impact a market, particularly in a normally slow trading period. A currency can lose or gain substantially when a major announcement is made about economic data, especially if it goes against the projection. A bunch of economic releases emerge every day in different time zones, but not every report can make a difference on major currencies. It is advisable to classify these releases based on its importance. Some important news releases include CPI data, trade deficits, GDP data, unemployment rates, central bank meetings, and interest rate decisions.