Time of Day Trading
More than any other trading market, the currency market relies on time when to trade. Being a 24 hour market, one would think it is a perpetual trading opportunity. Not so. Just as any day trader would tell you, there are times in the day when the volume is just not there to keep the charts chugging.
Markets move when traders act. Most of the big moves are made by the big guys, such as banks and other institutions. Since these professional traders trade for their paychecks, they follow a 9 to 5 routine wherever they are located around the globe. Of course, there are lunch times and break times to puncture these schedules.
Nowhere else is the trading routine more noticeable than in the Forex market. The currency market opens when Tokyo rises and closes when it strikes 5 p.m. in New York. It is a constant 24-hour cycle, but with peaks and valleys of activity.
Good traders look for those sharp burst of action when volume is aplenty and they can grab a few pips and log off. If you are trading exchange rates that feature the US dollar, then you would like to participate when it is early morning in New York. The activity is doubly energetic because this is also the time when the Europeans are trading in their afternoon sessions. This massive flurry of activity continues right up till noon, then it drops off as professionals head for lunch.
In this manner, a trader must chalk the zones of activity pertaining to their currencies. Since exchange rates are made up of pairs, it makes sense to position yourself for the best times in the time zones of the individual currencies to make for maximum pip movement.
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