When In the FX Week You Should Trade

When In the FX Week You Should Trade

When trading on the foreign exchange market everyone is looking for something which will give them the edge, or put them before their competition.  These edges come in a range of forms and are often small changes that you need to make.  One of these is to simply trade at certain times of the day.  This is an edge that many new traders do not consider simply because the forex market is always open; the fx week is 24/5.

When To Trade in the FX Week

It is not only new traders who fall into the trap of not trading at the correct times of day.  Many traders will have a set strategy which they use for every currency pair at any time of day.  This is actually not a good strategy as a pattern which works at 9 in the morning may not work at 9 that night.  The different strategies that people use will have different times of day when they are most effective.  To make the most out of a trade you need to identify the time of day your strategy will work.

When to Use a Breakout Strategy

People using the breakout strategy need to wait for a catalyst.  The only way for a breakout to occur is through a catalyst.  Additionally there needs to be momentum for there to be a continuation.  Taking all of this into account it can be calculated that the best time to trade for these traders is when there are economic releases.  It is best to work around the economic releases of America and Europe.  The reason behind using only these two areas is that economic releases from them will have a greater impact and cause more people to participate in the market.

When to Use a Range Strategy

Range strategy traders will need to keep an eye out for the economic releases that the breakout traders use.  However, unlike the breakout traders, range traders should avoid completing any trades during these times.  The easiest way to remember this is to think: breaking news equals broken ranges.  A range trader will be unable to trade well when the ranges are broken and work best when there are fewer participants on the market.

The Times to Trade

Data collected over the course of a year has provided many people with the exact times, in GMT, for different trading strategies.  The data has been broken up into the 7 common currency pairs and the volatility of the pair has been mapped.

According to the study breakout traders should trade during the hours of 1pm and 5pm GMT.  During this time traders from America and Europe will be online.  In fact during this time period around 60% of all forex turnover transactions are completed.  Range traders should stay away from the market during this time range.  The best time range for range traders is 9pm to 6am GMT.  The only traders on the market at this time are those in Asia and event risks are at the lowest.

Trading during certain times of the day will increase the returns, and the times will depend on the strategy used.  Studying the data allows you to see when the ideal times for your strategy are.

 

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