Setting A Forex Trading Schedule and a Written Example
Forex is a market that is global in nature. The global nature of the Foreign exchange market means that it is open around the clock throughout the week and there is a wide range of currencies to choose from. Traders therefore have a lot of flexibility when it comes to choosing when to trade. However, not all times are suitable for placing transactions.
Investors should set up a schedule based on the most active Forex hours which are the best hours to help maximize profits.
USA, London sessions are the most active times. These three sessions make up the largest volumes of transactions from across the world on a daily basis, although Asia is one of these 3 sessions best not to trade during this particular session.
There are also overlaps in the between the three sessions, where two sessions are open at the same time, these overlaps are the most active periods. These overlaps provide a great opportunity to trade in multiple markets at once and maximize your potential profits.
The best overlap is the one that occurs between the US and London markets. This is when the currency transactions are the most active and more opportunities present themselves.
Asian session is the least active of the three major sessions. All currency pairs move slowly or consolidate at a single point throughout the session. This is not a good time to be in the market - this is the best time to take a break. Even Asian investors avoid transacting FX currencies at this time and wait until night time to transact when the Europe and US markets are open.
Because the trading day lasts all day and night and it is not possible to stay up all night long, investors should set up a workable schedule. By gaining an understanding of these hours, one can set appropriate hours to increase chances of maximizing profits.
When setting up a schedule, it should accomplish the following goals:
1. Familiarize yourself with the various market sessions. These are: New York session, the London session, the Tokyo session.
London 3a.m. to 12p.m. EST ( 8:00 GMT 1700 GMT.)
New York 8a.m. to 5p.m. EST (1300 GMT 2200 GMT.)
Tokyo 7p.m. to 4a.m. EST (00:00 GMT-9:00 GMT.)
2. Trade during this time when currency pairs are most active.
3. Plan a workable schedule. So as to keep a balance between your time to get adequate rest. The best time is between 3a.m. to 5p.m. EST
When the USA and UK sessions are both open currencies will generally trend up or down and move a good number of pips in one direction. As a technical analyst, this time the indicators will provide good and profitable signals that catch the trend.
When the prices are trending and moving fast traders will find it much easier to make money.
On the other hand, during the other times for example the Asian session, the prices will be in a range movement and traders using technical indicators will have a hard time making profits as the indicators will generally tend to be more prone to whipsaws. One will find it difficult to make money in this range bound price action movements.
It is 10 times easier to make money when the market is moving up or moving down than it is to make money when it is ranging.
During the best times to open orders, i.e. 800 GMT and 1800 GMT the currency prices will trend in one direction, during other times like Asian Session, the currency prices likely to be Range Bound.
Some currencies are more active during a particular session than others and understanding this will allow you to make the most out of the market.
- London session 08:00 GMT -16:00 GMT most active currencies: EUR, GBP and USD.
- US session 13:00 GMT - 22:00 GMT most active currencies: USD, EUR, GBP, AUD and JPY.
- Asian session is a relatively slow for all currency pairs and not suitable at all. The most active currency is only the JPY.
Basically your plan should target 800 GMT and 1800 GMT as the time that you trade currencies.
Example of a Schedule on a Forex Plan
The example below shows how to specify your routine and time of day to watch the market. This will form the basis of your schedule. The time frame that you use will also be specified and mostly it will depend on what type of trader you are. The time set for this example is during the day when the UK and USA sessions are open as shown on the example below.
Written Currency Schedule - Forex Plan Sections