The best time for daily forex trading
Investors and traders can trade in currencies around the world, in any trading zone, 24 hours a day. London, Japan and New York are the three major currency dealers among all currency dealers. Their currencies are traded 24 hours a day. The only time when currency trading is suspended is on Friday, when the Japanese market is closing. So a window is formed one day after the Japanese market closes, before the morning of Monday comes on and the working day begins.
Most of the trading operations take place with the participation of banks, brokerage houses and investment companies. Companies buying and selling currency, performing their business functions, make up only a small part of the exchange of foreign currency. The Forex market continues to develop and grow at a constant pace, as more and more currency traders learn about its potential for profit and capital increase. The daily turnover of the foreign exchange market is 30 times higher than the turnover of any other financial market in the United States.
In addition, the constant demand and supply make the Forex market an accumulation of constantly growing excellent profit opportunities for currency dealers. The Forex market also uses a system of free fluctuation of rates, which is considered more practical for the modern foreign exchange market, which can survive changes in exchange rates every 4.8 seconds. The Forex market began to play a huge role in the economies of the countries after the transition from joint financial centers to a single market. Having spread all over the world, the Forex market reflects the constant growth of all international transactions and their countries. When considering the size of the foreign exchange market, it is important to understand that any transactions performed with a future trading broker or an independent trader can lead to the following operations. This may be due to the brokerage business,
Understanding your own portfolio and its sensitivity to the unpredictability of the market is essential for the efficiency of day trading. This is especially important in trading foreign exchange, as the currencies are exchanged and valued in pairs, and no pair will be able to handle completely independently of others. Understanding these relationships and how to change them will help you use it to control the expansion of your portfolio.
Certain relationships
There is a reason why all currency pairs are interrelated. For example, if you trade GBP against the Japanese yen (JPY) or GBP / JPY pair, then you trade in the USD / JPY and GBP / USD pairs. Thus, the GBP / JPY pair should slightly correlate with one or both of the other currency pairs. Nevertheless, the interdependence of these currency pairs stems not only from the fact that they are pairs. Despite the fact that there are currencies moving along one another, other currency pairs can move in different directions, which often leads to more complex forces of influence. In the financial world, correlation is a statistical measure of the relationship between two currencies.
There is also a correlation coefficient, whose values are ranging from -1 to +1. The correlation in +1 demonstrates that two currency pairs can move in one direction almost 100% of the time. If the correlation is -1, this means that two currency pairs tend to move in opposite directions almost 100% of the time. If the correlation is zero, the relationship between currency pairs is random.
Correlations are not always stable. Correlations change, like the global economic system and other factors that can change daily, so the ability to follow the changes in correlation is extremely important. Today's correlations may not correspond to correlations between the two currency pairs in the long term. Therefore, it is necessary to consider changes in the correlation over the past six months in order to more accurately determine the outlook for the relationship between the two currency pairs. Such changes - the result of several factors - the most common reason - the dependence of the currency pair on commodity prices, deviation of monetary policy and unique political and economic circumstances.
