The best time to trade in forex
Introduction:
Forex or foreign exchange market is a global market where different currencies are exchanged. Forex is a 24-hour market that is active from Sunday to Friday. In this market, you can buy and sell at any time, but is every time the right time to trade?
The answer to this question depends on several factors, including:
– financial markets:
Forex is heavily influenced by other financial markets, especially the stock market and the gold market. When the stock market is booming, investors seek higher risk and are attracted to stronger and more profitable currencies such as the US dollar, the British pound and the euro. When the stock market is depressed, investors seek greater safety and turn to more stable and less risky currencies such as the Japanese yen, Swiss franc, and Canadian dollar. Also, when the price of gold increases, the currencies of gold producing countries such as Australia, New Zealand and South Africa also strengthen.
– Central Bank meetings:
Central banks of different countries play an important role in determining the level of money prices and interest rates. When the central bank increases the interest rate, the currency of that country strengthens against other currencies, because the profitability of deposits and investments in that country increases. When the central bank lowers interest rates, that country’s currency weakens relative to other currencies because the rate of return on deposits and investments in that country falls. The meetings of the central bank are usually held once every month or once every three months, and the announcement of their results can cause drastic changes in the exchange rate.
– economic news:
There are other important economic news and events that affect the exchange rate. These news include economic indicators such as inflation, economic growth, foreign trade, unemployment, consumer confidence, etc. These indicators show the economic performance of countries and their currency demand. When the economic indicators are better than the expectations, the currency of that country will strengthen and when the economic indicators are worse than the expectations, the currency of that country will weaken. Economic news is usually published during the week and you can find their schedule in the economic calendar.
According to the factors mentioned above, the best time to trade in forex is when:
– The market is active:
When the market is active, trading volume is higher and price volatility is greater. This gives you the opportunity to make more profit or suffer less loss. When the world’s major financial markets such as London, New York, Tokyo and Sydney are open, the market is at its most active. These markets open and close at different times of the day and sometimes they are open at the same time. For example, from 14:00 to 17:00 GMT, the London and New York markets are open at the same time, which makes the EUR/USD currency pair the most active currency pair in Forex. One of the popular economic calendar sites for Forex traders is www.forexfactory.com where you can see the opening and closing times of various markets.
– The market is suitable:
When the market is favorable, the market conditions are in your favor and the price trend moves in your desired direction. This allows you to make more profit or take less loss. The right market depends on your strategy and trading style. Some traders prefer to trade in bullish markets because they think that the price of the currency will go higher in the future. Others prefer to trade in bearish markets because they think that the price of the currency will go lower in the future. Some people prefer to trade in markets without a trend or range, because they think that the currency price will fluctuate in a certain range. You need to know what kind of trader you are and how you can analyze the market so that you can find the right market for your strategy and mood.
– The market is stable:
When market conditions are stable, market rules and regulations are observed and unexpected and sudden factors do not affect the exchange rate. This ensures that you make your decisions based on reliable and logical data and not worry about unreasonable and unpredictable changes in the market. The market is at its most stable when there is no news and important economic events or when the news has already been published. These news and events may include war, various political movements in the world, natural disasters, changes in the monetary policy of countries, statements of high-ranking government officials, etc. These news and events may cause a sudden shock as well as uncertainty in the market and change the currency price irregularly and asymmetrically. You should always be up to date and follow the news and important events so that you can distinguish the unstable market from the stable market in time.
The best trading time depends on the trader’s strategy and what currency pairs the trader has included in his strategy, for example: if the trader has a trading plan in the EUR-USD currency pair, the best time to have trades is in The market is London and New York. Now, if a trader has his own strategy in the market of Wall Street indices and has a trading plan in Nasdaq, the best time for trading is in the New York market. If the trader’s trading strategy is in high time, fluctuations and economic news will not affect his trading strategy much. But if he has a trading strategy in low time, he must consider the news and economic approaches and consider the transactions with the time of the banks that are in his strategy. (Keep in mind that professional traders trade in low times.)
Result:
In short, the best time to trade forex is when the market is active, fair and stable. This time depends on various factors that you should consider before starting the transaction and according to your strategy, mood and goals, choose the best time in the market to have the best possible transaction.
