STAGE V Ė WHEN
When exactly should I trade, must be one of the many questions in
a novice traderís mind. And yes, it is an important question,
especially when you know that Forex is a 24 hours market, open for
5.5 days a week.
What needs to be understood is the fact that although its true
that the Forex market is open 24 hours a day, but it does not at
all mean that the market action the same always. Majority of
traders and investors do not stop to give this fact a thought for
even a moment. They do not even consider the impact this fact can
have on their trades.
Being in this volatile market, you as a trader should always give
yourself a fair chance to play. Just because a market is open 24
hours does not mean that all those 24 hours, it is moving in your
favor. There will be hours minutes or even moments when the market
can move against you. Trading during those circumstances is never
advisable. Trade only when you are sure that the market is most
expected to go with you. For example, the markets are known to go
in slumber during the days when London and New York are closed.
This is exactly where technical indicators are useful. But for
checking their authenticity of these technical indicators, the
best way is the trading volume. It is believed that these
indicators turn out to be more accurate when the trading volume is
But since there are no trading volume records obtainable in the
Forex markets, it is advisable to make use of trading ranges,
which is the next good option. Trading range can be defined as the
difference established between the high and low price limit for a
specific currency pair over a specified time period like one
With this approximate data in hand, an investor can now more
precisely and cautiously calculate when is the right time for him
If the trading range is high, entering the market would be a safe
bet at that hour rather than the time, when the trading range is
tight or low. Letís take the example of a trade in EURUSD, which
has an average trading range of 25 pips at 10 AM EST against the
EURUSD which has an average trading range of 7 pips at 10 PM EST.
Now entering the market during the morning session of trade will
give you a little more space for a safe trade in case it does tend
to fluctuate a little high or low, as compared to the evening
trading session, in which you would as it is be trading on margins
That is the reason why technical indicators are given so much
importance as they are mostly useful in predicting accurately, the
movements of the market. More often than not, the beginners in
this trading business tend to ignore the importance of "when to
trade" in the market. The professional, expert and refined trader
always appropriately times his entry in the market in order to
reap the maximum benefits and make the most profitable deals.
Limiting losses by analytically monitoring the market gives a
trader a more prospective outlook.