Forex trading can be an excellent way to generate additional income or even begin a full-time career, but to achieve any real profits it is necessary to understand how the market operates and when is best for trading. This article will show you when to trade Forex for maximum returns while providing a solid foundation upon which to build your trading strategy.
The Forex market is an international decentralized exchange market dedicated to currency trading and exchange rate determination. This global decentralized marketplace includes buying, selling and exchanging of various currencies at current or determined prices; trading volume-wise it is the world’s largest market and open 24 hours a day/5 days a week.
To successfully trade Forex, you need a broker. Selecting the ideal broker can be challenging but choosing wisely will pay dividends when selecting your broker – be sure to consider factors like their security level and service offerings as well as whether or not your chosen one provides demo accounts to practice trading before investing real funds into their services.
Traders must stay abreast of economic calendar and any major news events that could impact markets they trade in. At the beginning of every trading session, announcements and press releases of monetary policy or relevance to institutions traders typically come out. Institutional trading activity also rises sharply during these early sessions due to institutional traders who become active due to these announcements; particularly true during London session when, for example, Bank of England releases financial news or British companies hedge orders against future Pound Sterling purchases from overseas markets.
Each afternoon of each trading session tends to be less active. The US session overlaps with London until 12:00 PM EST, providing ample liquidity for major pairs like EUR/USD, GBP/USD and USD/JPY. Furthermore, this is often when US economic news releases which drive market sentiment.
The New York session kicks off at 8:00 AM EST and is one of the busiest times for major Forex pairs. As America is one of the largest economies worldwide, its market activity can have an immediate effect on the value of US Dollar. Political events or an interest rate decision from Federal Reserve will likely cause volatility within currency market; furthermore corporate news releases could cause sudden volatility as news can lead to violent currency movements if it is perceived negatively by market participants.