Forex trading is an altogether a totally different beast as compared to stock trading. One of the major differences between the forex and stock markets is that forex markets are open 24 hour, 5 days a week while stock markets have fixed timings. For example New York Stock Exchange (NYSE) is open from 9:00 AM to 4:00 Pm. You can only trade stocks at NYSE during this time.
Continuous 24 hour action at the forex markets baffles many new traders. Forex markets have no central exchange. It is an Over the Counter (OTC) market that is spread over various locations in the world.
For a new forex trader, it becomes very difficult to understand when to trade and when not to trade as there is no formal open and close of the market. Many exhaust themselves by sitting in front of their computers all day. Fatigue them and make wrong decisions. An easy way is to divide the day between three 8 hour sessions.
Further divide each 8 hour session into two 4 hour sessions using a 4 hour chart. This division of 24 hours is logical as there are only three major money centers in the world that have the capacity to move the forex markets.
The three major money centers that affect the forex markets everyday are namely: Asia, London and New York. We will call our three trading sessions, the Asian, the London and the New York Session.
Asian Session: Most of the turnover in this market session is handled by Sydney, Tokyo, Hong Kong and Singapore. Main players are the commercial exporters and the respective central banks. Since most of these central banks are in competition with one other, the price action during this session is jumpy and unsustainable.
London Session: London is still the forex capital of the world with deep and highly liquid forex market. Paris, Geneva and Frankfurt also are players in this session. The moves that originate in this session are very important keeping in view the amount of money needed to move a market this deep. These moves give you a lot of information about the market sentiments and positions.
New York Session: New York comes as the second forex center after London. Both these markets overlap in the morning when New York is opening and London is closing. This is the time when lot of action takes place.
The following timings give important breakdown of the 24 hour forex markets: 00:00 GMT-Sydney is opening. 11:00 GMT-Sydney and Tokyo have closed while London opens. 15:00 GMT- London becomes active with lot of turnover. 17:00 GMT- London is still active and New York is opening. 18:00 GMT- London has closed. 19:00 GMT- New York is about to close!
This overlap between London and New York is the time when major price action takes place. There is lot of volatility in the market and you can make many pips. London is the trend setter in both forex and fashion. - 23210
Continuous 24 hour action at the forex markets baffles many new traders. Forex markets have no central exchange. It is an Over the Counter (OTC) market that is spread over various locations in the world.
For a new forex trader, it becomes very difficult to understand when to trade and when not to trade as there is no formal open and close of the market. Many exhaust themselves by sitting in front of their computers all day. Fatigue them and make wrong decisions. An easy way is to divide the day between three 8 hour sessions.
Further divide each 8 hour session into two 4 hour sessions using a 4 hour chart. This division of 24 hours is logical as there are only three major money centers in the world that have the capacity to move the forex markets.
The three major money centers that affect the forex markets everyday are namely: Asia, London and New York. We will call our three trading sessions, the Asian, the London and the New York Session.
Asian Session: Most of the turnover in this market session is handled by Sydney, Tokyo, Hong Kong and Singapore. Main players are the commercial exporters and the respective central banks. Since most of these central banks are in competition with one other, the price action during this session is jumpy and unsustainable.
London Session: London is still the forex capital of the world with deep and highly liquid forex market. Paris, Geneva and Frankfurt also are players in this session. The moves that originate in this session are very important keeping in view the amount of money needed to move a market this deep. These moves give you a lot of information about the market sentiments and positions.
New York Session: New York comes as the second forex center after London. Both these markets overlap in the morning when New York is opening and London is closing. This is the time when lot of action takes place.
The following timings give important breakdown of the 24 hour forex markets: 00:00 GMT-Sydney is opening. 11:00 GMT-Sydney and Tokyo have closed while London opens. 15:00 GMT- London becomes active with lot of turnover. 17:00 GMT- London is still active and New York is opening. 18:00 GMT- London has closed. 19:00 GMT- New York is about to close!
This overlap between London and New York is the time when major price action takes place. There is lot of volatility in the market and you can make many pips. London is the trend setter in both forex and fashion. - 23210
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in Options and Forex Trading. Discover a revolutionary new Forex Robot.
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