When to trade FX

[Stargunner]

Hi guys,

I don't really trade FX, but I have heard that certain times of day are better than others for trading currencies. Presumably this is because volatility is higher at the European open or something like that. Can someone tell me what these times are, and the reasoning behind them?

Thanks

 

[ph_trader]

its a it hard to say why, i mean that a who topic in its self, might i suggest reading some books, ang going though courses just to gain the basics before advancing into specifics, it can be really confusing and its not as simple as it may seem.

 

[fxstrategist]

A lot of patience and education is the key to succesful trading. Also you need to keep a great discipline.

 

[Stargunner]

I already trade with quite consistent profits, I just don't know anything about FX, as I do stocks and indices.

I'm looking at dipping my toe in the FX waters though, and was just curious.

 

[fxmade2trade]

Many factors sway the FX market I wish you the best of luck, at a time with so much environmental and political change you may want to sit back for a week or so until you develop a system that can profit like you are already.

 

[Jason Rogers]

Hi guys,

I don't really trade FX, but I have heard that certain times of day are better than others for trading currencies. Presumably this is because volatility is higher at the European open or something like that. Can someone tell me what these times are, and the reasoning behind them?

Thanks

Great question, Stargunner

As others have suggested, there are many different strategies for trading forex. Some will perform well at times when others struggle.

However, if you want an overall view ignoring the particular strategies used, the table below is taken from a series of studies on trader profitability conducted by the DailyFX research team. They analyzed over 12 million real trades conducted by FXCM clients, and found that trader profits and losses could vary significantly by time of day.

That data show that most retail traders are range traders, and their successes and failures very much depend on market conditions. In fact, the reason some retail traders struggle with their range trading is because they trade during the wrong time of day for this approach.

Most forex traders are more successful during the late US, Asian or early European trading sessions – essentially 2 PM to 6 AM Eastern Time (New York), which is 7 PM to 11 AM UK time.

 

[neil]

Not many knew that

Great question, Stargunner

As others have suggested, there are many different strategies for trading forex. Some will perform well at times when others struggle.

However, if you want an overall view ignoring the particular strategies used, the table below is taken from a series of studies on trader profitability conducted by the DailyFX research team. They analyzed over 12 million real trades conducted by FXCM clients, and found that trader profits and losses could vary significantly by time of day.

That data show that most retail traders are range traders, and their successes and failures very much depend on market conditions. In fact, the reason some retail traders struggle with their range trading is because they trade during the wrong time of day for this approach.

Most forex traders are more successful during the late US, Asian or early European trading sessions – essentially 2 PM to 6 AM Eastern Time (New York), which is 7 PM to 11 AM UK time.

Thanks for that. Useful stats. Jason

 

[SpreadDoctor]

Hi guys,

I don't really trade FX, but I have heard that certain times of day are better than others for trading currencies. Presumably this is because volatility is higher at the European open or something like that. Can someone tell me what these times are, and the reasoning behind them?

Thanks

depends on what you mean by better. The centre of the FX world is London, the majority of the flow and thus major moves occur between 7am and 5pm London time with increased flow in the first 2 hours of London open. In addition most of the major moves occur on tuesdays,wednesdays and thursdays. This does not mean they cannot occur on Mondays and Fridays lol, check a daily chart for yourself and mind those Sunday bars. it is also worth noting that since it is August currently that August is typically a quiet month for all instruments however anything can happen at any time to drive things.

 

[Stargunner]

Thanks all for your help! The graphic is particularly interesting, especially since I was thinking of focussing on the cable, since most of my current knowledge is based on UK and US markets.

 

[Jason Rogers]

Thanks all for your help! The graphic is particularly interesting, especially since I was thinking of focussing on the cable, since most of my current knowledge is based on UK and US markets.

Have you already given thought to what kind of trading strategy you will use? Keep in mind that why range traders might be better off focusing on the relatively quiet Asian session, breakout traders may actually benefit from trading the European and US sessions and their overlap. Horses for courses. :smart:

 

[Stargunner]

Have you already given thought to what kind of trading strategy you will use? Keep in mind that why range traders might be better off focusing on the relatively quiet Asian session, breakout traders may actually benefit from trading the European and US sessions and their overlap. Horses for courses. :smart:

Well I tend to trade trends, buying the dip etc using Alexander Elder's methods. And just like how Elder feels, breakouts scare me. :-0

 

[SpreadDoctor]

Well I tend to trade trends, buying the dip etc using Alexander Elder's methods. And just like how Elder feels, breakouts scare me. :-0

if you want to trade trends in FX I believe you will need to be on the longer time frames, just my 2c. i.e. daily/weekly/monthly. So much tomfoolery goes on intraday that trend traders can easily get chopped to pieces. GL.

 

[Stargunner]

if you want to trade trends in FX I believe you will need to be on the longer time frames, just my 2c. i.e. daily/weekly/monthly. So much tomfoolery goes on intraday that trend traders can easily get chopped to pieces. GL.

The more I look into FX markets, the more I agree with that sentiment. I currently do intraday on index futures, and the technical analysis there is much smoother, with FX seeming to have whipsaws everywhere on the intraday.

The 'calls' ive made when paper trading FX have been much longer term, such as a long cable trade based upon diverging interest rate paths.

 

[SpreadDoctor]

The more I look into FX markets, the more I agree with that sentiment. I currently do intraday on index futures, and the technical analysis there is much smoother, with FX seeming to have whipsaws everywhere on the intraday.

The 'calls' ive made when paper trading FX have been much longer term, such as a long cable trade based upon diverging interest rate paths.

Yes and the reason is if you choose to trade one of the 2 main equity indices futures spoos or stoxx the volume is visible on an exchange. Of course plenty of tomfoolery still goes on and there are block trades you dont see and other ways of taking large positions that are off exchange. With FX the market is fragmented and volume is not visible, hence the people who can move the market can hide. This is also seen in a way when there is scheduled or unscheduled news and the 'currency always reacts first'. Lets say you have access to some sensitive information on interest rates. You are not going to play it on an exchange market with that info you will look to play in the currency market, hence it reacts first.

GL.

 

[Jason Rogers]

Thanks all for your help! The graphic is particularly interesting, especially since I was thinking of focussing on the cable, since most of my current knowledge is based on UK and US markets.

Glad you found it helpful! Since you like that graph, you might be interested in the full article by David Rodriguez.