FX TRADING STRATEGY
trading EUR/USD compared with 1.55 percent trading GBP/USD.
KEEPING TRACK OF TIME
One of the great things about the FX market is that it is open 24 hours a day, 5 days a week. Te flip side is that it preys on compulsive gamblers and keeps the uneducated glued at the screens for far longer than is conducive to disciplined trading. It is therefore really important
to
know at what time of the day your preferred FX pair is most active. Lose track of time and you lose sight of your goals.
By the way, did you ever wonder why there are no clocks up on the walls in casinos? Tat is because they want you to forget about time and overstay your welcome. Te longer one stays the less disciplined the decision making tends to get. People will anchor their self-worth to the dollar amount at which they were most profitable and if the stack of chips start to dwindle they will promise themselves to try to make back what they have lost and then
38 FX TRADER MAGAZINE April - June 2013 The longer one stays
the less disciplined the decision making tends to get
24-hour global nature of the markets. To illustrate what time is the most opportune for trading EUR/USD we have divided the 24-hour day into three segments that we call the Asian, the European and the U.S. session. We have then calculated the average movement for the pair in the past 100 days in these three different time zones.
quit. It quickly turns into a game of revenge and usually ends with a player losing everything. Not only are you tired but you are now resorting to bets you would otherwise not have played.
TRADE ZONES
In order to be successful we need to understand the importance of the
All times mentioned are expressed in Central European Time or CET.
During the Asian session (01:00 – 09:00) the EUR/USD moves an average of 40 pips. Tis session has the least liquidity and market makers tend to widen the spread significantly during these hours. Te range of this session will serve as a pivot for the remainder of the European session.
During the E u r op ean session (09:00 – 17:00) the EUR/ USD moves an average of 80 pips. Tis session has the most liquidity, the tightest spreads and is divided into six trade zones illustrated in chart 1.1 and discussed in greater detail later.
During the U.S. session (17:00 – 01:00) the EUR/USD moves an average of 48 pips. When there is still room for profits we will stay the course but never enter a trade aſter 17:00.
With this information it is clear that the hours between 09:00 – 17:00 are the most active and the only time
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