The Best Times to Trade the Forex Market

The forex markets are great because they are open almost all of the time and there are a wide range of currencies to choose from. This brings up an important question.

What are the most active forex trading hours?

Generally speaking, the most active forex trading hours all around are between the London markets opening around 8:00 GMT and end with the markets in the US closing around 22:00 GMT. The absolute busiest time in the forex markets are during the London to US overlap between 13:00 GMT to 16:00 GMT. These are the hours that are the most liquid or when the most traders are in the markets making trades. If your intention is to do daytrading, these are key hours!

What are the major sessions for forex trading?

There are 3 major sessions each day in the forex markets. They are the London session, theUS session, and the Asian Session.

The London Session
The London session starts around 8:00 GMT and winds down around 1600 GMT. The currencies that are the most active during these hours are EUR, GBP, and USD. 

The US Session
The US session starts around 1300 GMT and winds down around 22:00 GMT. The currencies that are the most active during these hours are AUD, EUR, GBP, JPY, and USD.

The Asian Session
The Asian session is a reasonable quiet session on most days. All pairs are pretty slow moving and it is not a good time to day trade. The only real currency that has noteworthy activity is the JPY and the activity is slow unless a major financial event happens. 

Summary

The best hours for trading the forex markets, no matter your method, are during the London and US session overlap. The markets are full of active participants during these hours and the currencies really move. For the most part, even the larger fundamental news comes out during these times. Trading during these hours is your best chance to get in while the market is making decisive moves and it will be your best chance to score quick profits.

Forex and Stock Markets

Forex market and stock market (stock and securities market) are two independent markets with no relation to each other. They differ in trade instruments: currencies are traded on Forex market, and shares, on a stock market. Stock markets are often located at the stock exchanges. The largest stock exchanges are situated in New York, London and Tokyo. Another difference between Forex and stock market is the amount of money required for trading. In order to buy shares on a stock market, one will need a significant amount of money, from $10 thousand to over $100 thousand. On a stock market trading is moderate and steady unlike on Forex market where one can either earn a large capital or sustain significant losses within a short period. Some traders who made a fortune on Forex market then move to a stock market. In its turn, a stock market is divided into primary and secondary markets. The primary stock market plays an important role in a country's economy: the pace of its development and effectiveness depends on the primary market to a great extent. On the primary market the companies usually launch their IPO. Buyers of the securities on this market, as a rule, are individual and institutional (investment funds, insurance organizations, etc.) investors. Securities on the primary market are traded by turning to investors directly and through intermediaries. The secondary stock market includes over-the-counter market and stock exchange. Here investors resell already emitted shares to other investors. Unlike the primary, the secondary market has no influence on the volume of the country’s investment flows. The main participants of this market are speculators who buy securities at a low price and then sell them at a higher price. One of the major regulators on a stock market is a price. It is formed with direct participation of specialists, emitters, intermediaries and investors. The prices on a stock market are formed in accordance with several principles: securities yield, their issuers, demand, situation on the market). These principles are realized through the strategies of price formation on a stock market: to setup the initial high or low price, to quickly gain profit from selling, to enter the market, and to conquer a part of the market. Stock traders have different aims: to get profit in the form of stock rate difference, to receive dividends, etc. Despite stability and safety of a stock market, before trading on it, one is advised to analyze the market to reduce the risks.

3 Live Trades That Were Generated Using The Forex Profit Caster Software

I have been discussing the new Forex Profit Caster software on this blog quite a lot recently, and after watching all of the preview videos, I have to say that I'm very impressed.

The trading method alone looks pretty impressive, but the trade alert software is even better because it plots triangles on the hourly and daily charts of the major currency pairs and tells you exactly where to enter and exit positions.

It also saves you lots of time because you don't have to scan the charts looking for trades, or try and plot these triangles yourself.

(If you haven't yet watched the preview videos, or downloaded the trading blueprints which talk you through the actual trading method step by step, the links to all of these free materials are available at the end of this article, which reviews Forex Profit Caster).

In this blog post I want to let you know that the third preview video is now available for you to watch.

In this latest video Bill Poulos provides you with 3 live trades that were generated recently using the Forex Profit Caster software. It not only shows you how effective it is at finding winning trades, but it also demonstrates how it minimises losing trades when you get the occasional losing trade.

ECN vs. Market Maker Comparison

This article assumes some knowledge of the way the forex market and forex brokers work. If you are not familiar with this, we recommend that you first read our "Structure of the Forex Market" and "How Forex Brokers Work" articles. Contrary to popular belief, ECN's are not superior to Market Makers in every way. There are advantages and disadvantages on both sides.

Minimum Deposits

There are retail market makers out there today that allow traders to begin with $1 in their accounts. That’s not to say that this is a great feature, but it does present options to people who may not have the kind of money it takes to open a Currenex account. It’s a good thing too, because ECN contract sizes are often multiples of $1 million, and some ECNs expect a daily volume of $25 million. Shackled with those types of minimums, you had better be well Capitalized (with a capital “C”).

Leverage

ECNs don’t allow the type of high leverage that is typical of market makers. To most people this is no great loss, since it is generally not advisable to use anywhere near the leverage that is available at most retail market makers. 

Transaction Costs

Whether they call it a spread or a commission is really irrelevant at the end of the day - no matter what, you have to pay to play. ECNs typically give you the prices they are dealt from their liquidity providers, with the exact same spreads, but then charge a commission for every round turn trade. This allows them to give discounts to high volume traders, lowering their costs, but to most traders, it is really irrelevant whether they are made to pay a commission with a tight spread or no commission with a higher spread. It works out to be roughly the same, depending on which brokers you are comparing, and what current spreads are like.

Volatility

The potential volatility is higher on ECNs because of their unfiltered slice of the market. By risking some exposure, market makers can generally mitigate this. Depending on the type of trader you are, volatility may be your friend or your enemy.

Stability of Business Model

The fact that a market maker is the counterparty to many of its clients’ trades, exposes it to market risk. While this risk should be well managed through appropriate hedging with a higher-tier counterparty, this may or may not be the actual case. Furthermore, even if the risk is well managed, it is still a risk. An ECN does not have to worry about this, as it provides only a service for which it charges a commission. At no point is an ECN exposed to market risk. What this means is that the likelihood of an ECN becoming insolvent is much lower than that of a market maker. This has serious implications for client funds which the broker is holding. On the other hand, any market maker worth its salt should keep client funds segregated from the company’s operating capital, itself be well capitalized, and keep risk management tight, therefore keeping clients relatively insulated against the possibility of broker bankruptcy.

Susceptibility to manipulation

While ECNs offer a “truer” participation in the market, the picture there is not necessarily prettier. The added transparency only brings to light the dog-eat-dog world that is the forex market. Trading with a market maker insulates your from that to some degree, but this can also be used to hide things from you. It is nice to have guaranteed stops, though, and you won’t find those on any ECN. Basically, in my view, ECNs are great for experienced day traders and scalpers, while market makers are better for everyone else, as long as they are deemed to be "honest".