Does it matter when I trade?
Traders spend a lot of time and money trying to figure out HOW to trade.They expend an enormous amount of their resources on systems,methodologies, techniques, and strategies that ultimately will give them only half of what they need. The secret the professionals don’t want you to know, however, is WHEN to trade. After all, they are on the winning side of every one of your losing trades.
Even though the Forex is open twenty-four hours a day, there are times when the market for a given currency pair is highly active, other times when it is moderately active, and times when there is no activity at all.
While you can make money whether the market is moving up or down, it’s extremely difficult to make a profit when the market is moving sideways.
And since the market for a particular currency may spend 60% to 75% of its time moving sideways, it is very important to know WHEN the trending activity is most likely to occur. It’s also easy to enter the market at the tail end of a trend and not know, except in hindsight, that the end was so near. After all, the indicators were telling you the trend was still going strong—so if you don’t know that this particular pair makes seven-bar moves, you go ahead and enter on the sixth bar of the trend. Two bars later, your trade is heading south in a hurry. It’s critical to know how many bars a trend is likely to last before there is a retracement or consolidation period, given the day of the week and the hour of the day the trend first began. Exiting too late is another common experience many traders share. At 6 AM, you place a contingent (IF THEN) order with your entry price and your stop loss, and head off to work. At noon, you check your trade and find out that by 11 AM the market had moved 90 pips in your favor. But in the last hour the price dropped 65 pips. The next time you’ll be able to check your trade is after work, so rather than tighten your stop loss to break-even in the hopes of a rally, you exit the trade at market for a 25-pip gain. That’s certainly better than nothing, but if you had known how many pips this currency pair was likely to move given the day of the week and hour of day the trend began, you could have set a target to exit with an 85-pip profit. Thus, if you know for a given currency pair the best days and hours to trade, the likely number of price bars the move will cover, and the number of pips this pair will most probably move, you would have to agree that you would possess some very powerful knowledge.
What does a typical 24-hour Forex trading day look like?Before we get into WHEN to trade, let’s take a closer look at a typical day in Forex time. This information is generally available on the Internet, but has been compiled here for your convenience.
Technically, the Forex operates on a global time scale, twenty-four hours a day, seven days a week, with no start or end time. Given that no one stays awake 24 hours a day and that very little trading takes place on theweekend (from Friday at 13:00 PM US EST to Sunday at 17:00 PM US EST), the Forex trading day naturally breaks itself down into three major trading sessions:
1. the Australasian session (New Zealand, Australia, and Tokyo)
2. the London session, and
3. the New York session.
It’s interesting that these sessions just happen to coincide with the opening and closing of their associated stock markets.The first thing you probably noticed is that from the New Zealand open to the New York close, the entire 24-hour day is covered. What’s more, you can see that the Australasian session has three stock markets open at the same time, with the last hour of the Australian and Tokyo sessions (3:00-4:00 AM US EST) coinciding with the opening hour of the London session.Furthermore, the London and New York markets share the hours between 8:00AM US EST and 13:00 US EST. In other words, from 19:00 US EST to 4:00 US EST and from 8:00 AM US EST to 13:00 PM US EST, two or more markets lap. In fact, the areas highlighted in yellow represent the Forex market’s busiest fourteen hours. This is because when two or more markets share the same hours, there are more traders to drive volume and volatility up.
What you have just seen is the general foundation for WHEN to trade.However, as important as this information is, you should know that each currency pair has its own unique set of “habits” that make up the key to its individual WHEN. And some of those habits run counter to the chart above. Without that specific knowledge, you’re still trading blindfolded.
This is probably a good place to share a story about Robert. He does pretty well in real estate, but wants to get into trading full-time. He’s busy with his current job, and even though he works his own schedule, he doesn’t have a regular time to sit in front of a computer for several hours. In spite of this, he has invested a good deal of cash in all kinds of trading systems. More than once, he has lost most of the money in his account, but he keeps coming back.At some point, he came across the information outlined in the sessions chart above. In his haste to make a success of himself as a trader, Robert took a one-size-fits-all approach as he applied this newfound knowledge to his trades. He followed a simple rule: if his system gave him a solid signal, as long as two or more markets were open at the same time, he would enter the trade. And guess what? A remarkable thing happened! He started hitting a few winning trades now and then, and he’s now able to stay at right around break-even. While this may be a great improvement, he is still far from his goal. He’s trading with a shotgun, armed with only a part of the knowledge he needs, and what he doesn’t know about WHEN is robbing him of his profits. If I’m trading the 4-hour bars, when are trends most likely to occur within the Forex trading day?
What you are about to read next will make a great difference in your trading. This is some of the information that the pros hope you never discover. for more detail and a free ebook on how to trade the forex send an email to info@siscocommunications.com
Posts Tagged Autotrading
If you’re a Forex trader, or considering getting involved and becoming one, you’ll soon find that one of the things that really puts a hamper on your abilitiy to generate massive amounts of profits is the sheer amount of time you have to spend in front of the computer. There are times it can simply be daunting, sitting there waiting for the right signal to hit the trade you want to make.That, right there, is one of the largest positive things that a Forex autotrading robot can bring to your trading efforts. It can automate many of the things that you find tedious or time demanding. Most of the robots on the market also include expert advisors that are programmed to watch the trends of the currency market and make trades on your behalf. They can buy, they can sell or they can simply give you the signals and you can make the trades or analyze them on your own before making any decisions about them.Of course, if you take full advantage of what these automatic trading programs offer then in theory you could literally cut your personal trading time by many hours each day. That is, if the trading advisor fits your personal trading style and has a track record of successful trading. However, you can also use them to only do certain tasks for you. For instance, maybe you’d rather set your own signals and have the program monitor the market to watch for the trends you input and have it automatically make a trade for you when certain requirements are met. Or, maybe you’d rather make the trades yourself for whatever reason you choose but you’re very confident in the advisor’s signals so you use them as guides for when you to buy or sell.Whether it’s to massively cut down on the time you spend trading and maximize the time you have available or to take advantage of expert trading signals that are programmed into the software by professional traders, the benefits to using an autotrading robot make them definitely worth the look.
If you are a forex trader, you are probably aware of the large profit potential that this market possesses. For a number of reasons, it is possible to make more money as an individual currency trader than in nearly any other field, in terms of the time-to-money ratio required.
Leverage (the ability to control 50x your account value or more) can be one of the forex trader’s most useful tools when it comes to creating money through trading. It is this leverage, combined with seamless market access and very low transaction costs that mke forex trading as lucrative as it is.
However, even though the potential rewards of becoming a successful forex trader are great, being a full time trader still does require a large time commitment. It possible, though, to take advantage of the benefits of the foreign exchange market without the large time commitment, and that is the topic of this article.
The term that I want to introduce to you (which is something you may or may not have heard of) is called ‘autotrading.’ Autotrading simply means devising a set of mathematical rules and calculations, plugging them into your trading platform, and literally having your platform trade for you regardless of whether or not you are at your computer.
Have you ever heard the term ‘passive income?’ Well in kind of a funny way, creating and setting into motion a forex autotrading system is alot like creating a stream of passive income. Allow me to explain:
In business, there are really two types of income that you can earn: either active income or passive income. Working as a shop clerk would be a good example of active income, because you come to work one day and later you will be paid for one day’s work. If you want to make more money, you must again do more work.
Passive income is a bit different. Working to set up a utilities company is a good example of passive income. There might not be any immediate benefits, but once you get the company rolling you will have people that pay you like clockwork every single month because they need utilities.
So instead of trading your time for money, you spend your time setting up a system that will make money for you regardless of whether or not you are still working at it. That is exactly what creating a forex autotrading system is like.
When you trade the forex market in the regular sense, you will need to sit down at your computer and identify a profitable trade every time you want to make money. Now this can still be very worthwhile, but if you want to make more money you will need to do it al over again.
When it comes to devising a forex autotrading system that can be consistently profitable, instead of spending your time doing something that will make you money once, you spend your time doing something that can make you money over and over again.
You put your energy and effort into devising, tweaking, and testing different technical and mathematically-based strategies, and once you can create a trading system that can profit consistently over time, all you need to do is set it up and walk away.
A few good forex trading platforms that I know of that support autotrading are called Metatrader and Tradestation. When using Metatrader, you will use their simple programming language to create a small piece of code called an ‘expert advisor.’
In your code, you will give the instuctions for your technical-based trading strategy, such as what indicators or calculations should be used to find entry and exit points.
All in all, forex trading has massive profit potential, and creating an autotrading system is one of the ways that you can leverage your time and effort to make as much mney as possible.
You can also learn about my own trading strategy that I have come to call Forex Surfing, and how to make money riding the ‘waves’ of the global economy.