Continued from Part 1: How To Set a Forex Trading Schedule…

The 4 Forex Trading Operating Hours are (hours in EST):

• New York (0800hrs to 1700hrs): Kathy Lien’s report (2005) “Day Trading the Currency Markets” declares that New York is the world’s second largest forex platform and is closely observed by foreign investors as 90% of all trade involves the US dollar. Any movement in the NYSE (New York Stock Exchange) can have immediate and powerful effects on the dollar. Finalization of company mergers and acquisitions can instantly gain or lose the dollar value.

• Tokyo (1900hrs to 0400hrs): Tokyo, the first of the Asian trading centers ever to open, has the greater bulk of trading in Asia, slightly ahead of both Hong Kong and Singapore. The best of the currency pairs to look at (for traders wanting plenty of action) are GBP/JPY, GBP/CHF and USD/JPY. The USD/JPY pair is especially good to watch while only Tokyo is open, due to the heavy influence from the Bank of Japan over the market.

• Sydney (1700hrs to 0200hrs): The trading day begins officially in Sydney, and though the smallest of the currency mega-markets, it does see plenty of initial action as the markets open again on Sunday afternoon with financial institutions and individual traders both trying to stabilize, following any action that might have taken place since Friday afternoon’s last trading activity.

• London (1500hrs to1200hrs): The UK dominates the currency exchange markets worldwide. London is known as the trading capital of the world, accounting for approximately 34% of trading globally, according to a London IFS report. London, the UK capital city is home to the Bank of England where interest rates are set and the control of monetary policy lies, having a huge impact on currency fluctuation. Many Forex trends originate in London, something technical traders should keep in mind.

Crossovers/Overlaps in Trading:

Certainly the best time for Forex trading is during an overlap in the trading times of open markets when there are typically higher price ranges that can result in greater opportunity.

• US/London (0800hrs to1200hrs): These four hours are the overlap within the US/London markets and according to Kathy Lien, over 70% of all trade happens when these markets have their overlap because the USD and the EUR are the two most popular currencies to trade and here they meet the GBP too. With volatility high during this period it is an optimal trading time.

• Sydney/Tokyo (0200hrs to 0400hrs): These couple of hours aren’t as volatile as the US/London overlap, but they still offer the chance for trading during a period showing higher pip fluctuation. Traders should consider the EUR/JPY as an ideal currency pair, being the two main influences in this period.

• London/Tokyo (0300hrs to 0400hrs): This single hour overlap occurs when most US-based traders are probably not awake, so of the three overlaps it tends to see much less amount of action. The one-hour crossover affords little opportunity for watching large pip changes happen.

A Forex trading schedule needs to be set up that allows for a strong balance between market overlaps and news releases. To enhance profits, Forex traders should aim their trade at the more volatile times, whilst keeping an eye on whatever economic data is released and when. With such a balance it allows full-time and part-time traders opportunity to set schedules that bestow peace of mind, in knowing that opportunities aren’t slipping away if they are not constantly watching the Forex markets.