forex trading

Best Forex Trading Times

So what are the best forex trading times? The forex market is open 24 hours a day during the business week, but this does not necessarily mean that all of those 24 hours are good for trading. There is a lot more activity on the foreign exchange markets at certain times of day and generally speaking, the best times to trade are when the markets are busiest.

The two biggest trading floors for forex are London and the US markets. Although the UK does not use the euro, most euro countries are within one hour time difference from the UK, as is Switzerland. US time zones also include Canadian. So the London session and the US session between them cover most of the major currencies that are traded.

The London session starts at 8.00 UTC and finishes at 16.00 UTC. The currencies that are most active during this session are the euro (EUR), British pound (GBP) and US dollar (USD) which is involved in the majority of all trades.

The US session starts at 13.00 UTC (8.00 EST) and finishes at 22.00 UTC (17.00 EST). The most traded currencies during these times are USD, EUR, GBP, AUD (Australian dollar), JPY (Japanese yen) and CAD (Canadian dollar).

The peak trading time, as you might expect, is during the three hours when these two sessions overlap and the markets are open in both London and New York. This period runs from 13.00 to 16.00 UTC (8.00 to 11.00 EST).

If you like to let your orders run over several days it may not make so much difference to you to know the busiest times on the markets. But if you are involved in day trading forex where you might open and close a trade within a few minutes, you will find most opportunities coming up during the most active hours.

If you are involved in a cross rate, i.e. a currency pair that does not involve the US dollar, you may have another window of time when the financial centers in your two countries are open for business.

For example if you were trading AUD/JPY you might find that trading was good during what is called the Asian session. The Australian and Japanese business hours are pretty close and on a day when activity was expected you might find some profitable trades during the overlap. However, generally speaking this is a slower session for just about all currencies.

So the best time for most forex traders is during that three hour window in the morning in the US and the afternoon in the UK and Europe, when the markets are open on both sides of the Atlantic. Trading can be frantic during those hours, there is maximum liquidity and the currencies move far and fast. A lot of the important financial news is released during this period too, especially toward the beginning. So these hours are the best forex trading times if you want to grab quick profits.

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Monday, December 27th, 2010 Introduction, Strategy No Comments

How To Make Money On The Forex Market: 5 Golden Rules

Just as there are rules and guidelines for forex trading strategies when you are learning how to make money on the forex market, there are also tricks for dealing with personal factors and habits that undermine our success. Here are 5 golden rules for handling ourselves so that we can move smoothly from hesitant beginner to successful forex trader.

1. Keep Cool

Successful traders do not let their trading depend on their emotions or their emotions depend on their trading. They do not risk more because they are feeling lucky, they do not hesitate when the signs are right, or pull out of a trade too soon out of fear. Equally, they are unlikely to celebrate a gain, nor will they sulk, shout or kick the dog when they lose.

A person who is ruled by their emotions will not make it as a forex market trader. Self discipline can be learned but make sure that you have fully mastered your emotions on a demo account before you think of going live. If you are still taking unplanned risks you are not ready for real trading.

2. Think For Yourself

Different traders have different techniques. This means it there is limited value in getting advice from anybody else. In fact, unless you know that the person follows your system and techniques, their advice is probably worthless to you.

Do not copy somebody else’s system just because they seem to be making money with it. Do your own research and check everything that you are told. Even then, consider carefully before abandoning the system that you have chosen before. There may be factors that you have not taken into account. Something that works for somebody else will not necessarily work for you.

3. Keep Records

Keep a spreadsheet detailing every trade so that you can see patterns in your own results. You do not necessarily need to use it to change anything, but refer to it often to remind yourself of the many small trades that add up to success or failure.

What should you record? At a minimum, the currency pair, your position and the opening and closing prices. However, these bare facts will be much more informative if you can also add why you took the position. Did it fit the criteria of your system? What made you think that the trend would go your way? When you look back you will have a much better view of why your trading history is going well or not so well.

4. If In Doubt, Stay Out

Do not open a trade if you are hesitant or unsure about it, provided of course that you have a reason other than fear for your hesitation. A trade can only go one way or the other, so if it is not completely right, it is wrong. Wait. There will be plenty of better opportunities.

5. Limit Your Trades

Do not be drawn into thinking that you must never miss an opportunity. You do not have to be on top of a lot of different currency pairs and jump into every market regardless of what else you may be doing.

Limit the number of open trades that you have. It is not a good idea to have more than two open positions at the same time, and unless your first trade in the forex market is profitable you should not even consider opening a second.

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Tuesday, November 30th, 2010 Introduction, Strategy No Comments

How (Not) To Lose Money With FX Currency Trading

Forex or FX currency trading is a risky business. Many people go into it with high hopes of getting rich and quickly find that it is easier to lose money in the foreign exchange markets than to make it. Even if you are ideally financed and have the best system, robot or plan, you may discover the sad fact that the one thing holding many traders back from success is themselves.

So in this article we look at some of the major pitfalls of forex trading and how to avoid them.

1. System hopping

One surefire way to lose money with forex trading is trying a system for a few days and giving up on it because it made a loss or two. Before you even start using a system you should be as sure as a person can be that it is going to be profitable. You have to accept losses and stick with it.

Remember that if you bail out every time that you are losing, you never give your systems a chance to put you back into profit. You will lose your shirt for sure if you hop from one system to another without giving anything a chance to work.

2. Dwelling on ‘what might have been’

One of the worst temptations of trading is being drawn into wasting time and energy on thinking about how much we could have made if only we had acted differently. Often a situation will arise that does not quite meet the requirements of your system. You wait, and perhaps it turns out that you could have made a lot of money if only you had acted.

But thinking this way is dangerous. Another time the same situation will turn against you. We tend to remember all of the lost chances to win and forget that by keeping to the plan, we also miss a lot of losing situations.

3. Impatience

You will lose money if you do not have the patience to wait for the right trading opportunity. A short run of losses can make us feel desperate for a successful trade, but we must still wait for the right market signals. Do not be led into acting too soon by excitement or the fear of missing an opportunity.

4. Hesitation

On the other hand, it is also important not to hesitate too long. When the right moment comes along, act with conviction. Have your plan written down and keep it in front of you at all times so that you know exactly when the signs are right for your trade. Do not wait until you see a trend forming to start thinking about your position size, leverage or stop loss. Everything should be in place so that you can take advantage of a genuine opportunity.

5. Letting emotions drive your trading

We all know the danger of letting our emotions lead us in any trading situation, at least in theory. In practice it can sometimes be hard to tell the difference between fear and caution, or between profit maximizing strategies and greed. Having a written plan will help again here, as will training with a demo account where emotions will not be nearly so strong.

Some people find that they cannot make money with a demo account because they are getting into experimental trades, telling themselves that it does not matter because it is not real money. If they do then start trading with a real account they are completely unprepared for the emotional punch of real time trading and have not learned any discipline to help them handle it.

So whether you are trading in demo mode or for real, take it seriously. Be sure to avoid these traps if you want to make money with FX currency trading.

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Saturday, November 20th, 2010 Strategy No Comments

Forex Trading Strategies: 3 Golden Rules

When you have read a few forex books or visited a few online currency trading forums, you will quickly realize that there are almost as many different forex trading strategies as there are traders. People have their own style; but more than that, in currency trading there are many different ways of making money.

So there is not one top forex system that you must follow to profit from foreign exchange trading. However, there are some guidelines that apply to the way in which you approach your trading and these are true for just about anybody. I call them the golden rules of trading.

1. Follow The Trends

Most forex trading strategies and systems focus on identifying trends and there is a good reason for that. Whether the trend shows a rise or a fall, get in to go long or short as appropriate and do not go against it. Bucking the trend will see you losing money fast.

2. Safeguard Your Funds

Risking too much on one trade has been the downfall of many a promising trader. Never risk a lot of money on a single trade, however strong your feelings may be that this one cannot go wrong. They can all go wrong.

So how much do you risk? It depends on your strategy and how much it matters to you if you lose all of your funds, but never more than 5% of your balance. 2% per trade is a safer option.

Some people maintain the percentage as their funds increase, so that they gradually risk more in real terms on each trade. That is up to you but consider carefully before you do this. When you have more money in your account, you will probably be more unhappy if it is wiped out, so you may want to keep the same position size (reducing your percentage risk) as your funds increase.

3. Set Goals For Each Trade

Have a clear profit goal for each trade, so that before you enter, you have already decided when you will take the profit and close. Do not get greedy and try to stay in there for more and more.

In the same way, if it turns bad, do not try to hold on in the hope that the market will turn back your way. Cut your losses and get out. Using stop losses to do this automatically is a very wise strategy.

Those are the first three golden rules of currency trading: the guidelines that can help you develop profitable forex trading strategies, whatever your system.

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Monday, June 29th, 2009 Introduction No Comments

Forex Trading Training: Get What You Need

If you want to become a successful currency trader, then no matter what background you have, you will need forex trading training. Currency trading has its own rules and even if you have experience of day trading on the stock exchange there are a few things you will have to learn. So how do you go about finding training that is right for you?

One factor that you will want to take into account is the cost of your training. There is a huge range here from free information available on the internet to private mentoring from a successful trader that could cost you a thousand dollars a month or more.

Clearly, mentoring will only be of value to you if you intend to trade full time. Private coaching is most useful for people already profiting from forex trading but wanting to make more. Those people are also likely to be in a position where they can judge which coach or mentor will be most suitable for their own trading style. If you are just starting out, you would be better off covering the basics in some other way.

A good way to do this is to use a book or ebook. These are usually organized in a way that will be easy to follow and will cover the basics for beginners. Most will also cover more advanced aspects as you progress.

Ebooks have several advantages over printed books. First, you can download them right away. You do not have to go to the store or wait for them to arrive from Amazon.

Second, as well as the forex book itself, they often include other training materials such as spreadsheets, audio recordings or even video. Many people learn better from video than from the written word. When you are learning a new technique it can be very powerful to be able to look over somebody’s shoulder and watch while they show you how they do it. Video can offer you this experience and save you a lot of confusion.

Also, if you buy a forex ebook you will often find that you can get some kind of support. You may be able to email the author with your questions, or there might be a forum that you can join. You almost never get this from a printed book.

It is true that there is a lot of information available for free on foreign exchange websites and you can also pick up tips and tricks from free forex forums. However, the information you will get from free sites and forums is usually very disorganized and may be contradictory. You can see this very quickly if you look at the questions on any forum. One person comes along with one answer, and then another argues something different.

So free information is useful while you are deciding whether to get involved in forex trading at all. But once you have made up your mind, you will want some more helpful forex trading training.

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Friday, June 26th, 2009 Introduction No Comments