Currency Trading Information Channel |
|
|
|
Be a Smarter FOREX Currency Trader: Three Basic PrinciplesBelow I will describe three basic principles that may come in handy for currency traders. They are very easy to implement and potentially take advantage of as you will see. Principle 1 Some currency traders find that it is useful to always trade a given currency pair at the very same time every day. The reasoning for this is that most of the other traders buying or selling that currency pair may also trade at the same time. Major trading pits may also be working the exact same shift every day. This technique may be especially useful for currency traders who exploit technical analysis. Again, the reasoning for this is that it may be possible to standardize the trading conditions if one trades during the same time frame every day, if only for a very little bit. However, that small bit of standardization may yield several pips worth of profit. Nevertheless, it is readily obvious that the foreign exchange market can be very volatile and random. Principle 2 Certain currencies trade with a certain volatility at a certain time. Once you've finished practicing your trading skills on a demo account and you decide to test the waters using your own investment capital, you may want to minimize the amount of liquidity and volatility to hedge your risk. Alternatively, you may want to increase the risk involved, and potentially increase your profit potential. (It should be noted that very heavy risk is involved under any circumstances.) The foreign exchange market follows the sun around the world moving from the United States to Australia and New Zealand to the Far East, to Europe and finally back to the United States. Overall foreign currency trading volume is determined by which markets are open and the overlap in the times that these markets are open. Currency trading volume is relatively high 24 hours a day, but there are considerable peaks in activity when the British, European, and US markets are open simultaneously, which is from 1 pm GMT to 4 pm GMT. Pacific Rim markets, such as Japan and Hong Kong, show a dip in their trading volume while there is extensive volume in the US market at the very same time. Nevertheless, it is still possible to perform technical analysis on Pacific Rim currencies. By trading during a certain time frame, one may be able to either minimize or maximize the level of volatility (and risk) for a given currency pair. Principle 3 Although the above is a general statement about the activity volume for certain currencies, it may be a good idea to attempt to capture the level of volatility for given currency pairs. You can potentially use Bollinger bands, a tool used by technical analysts, to quantify volatility. Bollinger bands compare volatility and relative price levels over time. Some currency traders cannot trade a day in their life without using Bollinger bands, while others may not find any use for them; it is really up to you to decide whether Bollinger bands are of any use to your specific situation. I have described three basic principles that may potentially come in handy for currency traders in the foreign exchange market. They are very easy to implement and may reap rewards (or lack thereof) depending on market conditions. Hopefully these principles will help you come up with your own successful strategies for trading currencies in the foreign exchange market. Joshua M. Kunken is Currency Analyst for ForeignMarketWatch.com. His articles may also be found at ForexTrack.com.
MORE RESOURCES updated Thu. March / 28 / 2024 FX: When OMS meets EMS Euromoney magazine Foreign exchange contact group (FXCG) European Central Bank Stock market today: Asian shares trading mixed after Wall Street's momentum cools San Francisco Chronicle Dollar gains on euro with Fed's Waller hawkish on rates The Economic Times 3 Best Forex Brokers for 2024 NerdWallet Morning Bid: Yen traders on tenterhooks Yahoo Canada Finance Yen steady after intervention warning, dollar dips Yahoo Finance FOREX.com vs. Robinhood: Which Is Right for You? The Motley Fool EUR/USD Analysis Today 28/3: Pressures Ahead (Video) DailyForex.com This Is How You Make Money Trading New York Magazine Stock market today: Wall Street ticks quietly higher ahead of consumer confidence report The Atlanta Journal Constitution Best Forex Brokers In March 2024 Bankrate.com Forex Today 28/03: Fed's Waller: Slow on Rate Cuts, No Hikes DailyForex.com Top Fiat Currencies Used to Trade Bitcoin Investopedia Europe Playing Bigger Cryptocurrency Role ETF Trends USD/PKR Analysis Today - 28/03: Steady USD/PKR Trend (Chart) DailyForex.com USD/TRY Forecast Today 28/3: Struggle Against USD (Chart) DailyForex.com Towards Increasing Complexity: The Evolution of the FX Market - Liberty Street Economics Liberty Street Economics - U.S. dollar closes lower on Taipei forex market Focus Taiwan EUR/USD analysis: Will US dollar retreat again? FOREX.com US AUD/USD Signal Today - 28/03: AUD Weakness Noted (Chart) DailyForex.com Forex Trading for Beginners NerdWallet Stock market today: Asian shares rise after Wall Street sets another record The Associated Press Why Is the Forex Market Open 24 Hours a Day? Investopedia EUR/JPY Forecast Today - 28/03: Euro Dips vs Yen (Chart) DailyForex.com Rupee trades in narrow range against US dollar in early trade The Economic Times Dollar firm after Fed comments; yen under close watch The Economic Times EUR/USD Analysis Today 27/3: Tight Range Trading (Chart) DailyForex.com China's New Currency Playbook Council on Foreign Relations How Often Do Exchange Rates Fluctuate? Investopedia Trader's Case Tests DOJ's Policing of Global Currency Market The Wall Street Journal Forex Today - 27/03: Japanese Yen Hits 34-Year Low DailyForex.com How can blockchain platforms make currency trading cheaper? Financial Times GBP/USD Analysis Today 28/3: Data Determines Fate (Chart) DailyForex.com Rupee turns flat at 83.33 against US dollar amid high crude oil prices Business Standard USDBRL Analysis Today - 26/03: USDBRL Range Reversal (Chart) DailyForex.com USD/MXN Analysis Today - 25/03: Bearish USD/MXN (Chart) DailyForex.com USD/SGD Analysis Today - 26/03: USD/SGD Reflexive Range DailyForex.com
|