Saturday, 3 November 2012

The Forex Market


The currency trading market has a volume that surpasses $4 trillion a day. In the Forex market, currencies are traded  by commercial banks, corporations, institutional  investors, hedge  funds and individuals like you, typically via brokers.  In simple terms, it is where you can buy and sell currencies, simultaneously.  The way it works is much like the process of currency exchange  at airports or hotels where you can exchange the currency you deal with for the local currency. For instance, lets say a traveler visits a new  country or when  an international  business pays its foreign employees, they each convert their local currency into foreign currency. Overtime these conversions and transactions cause  a shift in the  exchange  rate; when  money   ows into a currency, it strengthens it and when money  ows out of a currency it weakens it. These shifts in value are what give life to the FX market.
Above all, the Forex market is a traders market. Though once reserved for large institutions and wealthy individuals, the Internet revolution  changed all of that  and  made  the  Forex market accessible to anyone, giving traders the opportunity to buy or sell for potential pro ts anytime. FX traders attempt to predict the direction of an exchange rate; they buy a currency pair when they think the exchange rate will increase and sell a currency pair when they think the exchange  rate will decrease.
mes when the major markets are active and how this can be helpful to the
Market Hours
The market hours for the major FX markets are as follows:
London:             3 AM to 12 PM Eastern time (approx. 35% of total FX volume) New York:                  8 AM to 5 PM Eastern time (approx. 20% of total FX volume)       Sydney:              5 PM to 2 AM Eastern time (approx. 4% of total FX volume)     Tokyo:                7 PM to 4 AM Eastern time (approx. 6% of total FX volume)

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London




















New York
























Sydney
















Tokyo


















How  can  the  above  information  be utilized?
The higher  the  number  of trades  executed  during  a given  time (all things  being  equal), the  less the  Bid/Ask spread  will be, thus  the greater the liquidity.
Many  trading  opportunities  can  represent themselves   when   the   largest    markets (London  and   New  Yor markets)  overlap, which is between 8 AM and 11 AM EST. However, as  each  trading day di ers  from  the  other there are no guarantees that this time frame will generate  incredible  trades  on a regular basis.
While theres an overlap between Tokyo and Sydneys  market  trading hours,  it is not   as important as the London and New York overlap due to the considerably lower trading volume.
Basics of Currency Trading
What are the basics of currency trading?  How is each transaction conducted in the FX market? What currencies are traded? Having its own language and set of principles, one should familiarize him/her  self with the terminologies  and the functionality of the FX market.
The exchange rate measures the relative value of a currency meaning it measures how much one currency is valued at in terms of another currency.
Basics of Currency Trading
mes when the major markets are active and how this can be helpful to the
Market Hours
The market hours for the major FX markets are as follows:
London:              3 AM to 12 PM Eastern time (approx. 35% of total FX volume) New York:                   8 AM to 5 PM Eastern time (approx. 20% of total FX volume)
Sydney:               5 PM to 2 AM Eastern time (approx. 4% of total FX volume)    Tokyo:                 7 PM to 4 AM Eastern time (approx. 6% of total FX volume)

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London




















New York
























Sydney
















Tokyo
How  can  the  above  information  be utilized?
The higher  the  number  of trades  executed  during  a given  time (all things  being  equal), the  less the  Bid/Ask spread  will be, thus  the greater the liquidity.
Many  trading  opportunities  can  represent themselves   when   the   largest    markets (London  and   New  Yor markets)  overlap, which is between 8 AM and 11 AM EST. However, as  each  trading day di ers  from  the  other there are no guarantees that this time frame will generate  incredible  trades  on a regular basis.

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