Times of the Day: When to Trade a Forex Strategy

There are many ways in which a particular forex trading strategy can be improvised and optimized. It is possible to devise exciting and interesting strategies on the basis of factors that have only an indirect
relationship with the price action itself. The first being timing, in the context of trading forex online.
Apart from the ordinary timing problems involved that must be solved during the determination of entry/exit points, a trader can also benefit from applying particular strategies during particular times of the day. The
following gives a brief example of such an analysis, focusing on the New York market.

1. 8 am – 11 am

This is when the New York market wakes up. Although traders are by their desks about an hour before 8 am, the crescendo of tension and excitement reaches its highest intensity in this time frame due to the numerous
important pieces of data and news being released to the trader community. The main part of the releases take place at 8:30 am on a typical day, but the trickle of data keeps coming throughout the early hours of the morning.

2. 11 am – 1 pm

There are not that many important releases during this period, except that sometimes large options may expire at 11 am. This is the digestion period for traders; not only news and data are digested and reflected
on the price values, but traders also have lunch, and trading often becomes subdued at around noon. Of course, any kind of unexpected development can still disrupt the pattern, but it is very common during these hours to see the market undergo corrections to the trading day’s early moves.

3. 1 pm – 4 pm

This period may either be a continuation of the mornings established patterns, or may develop into a reaction depending on the markets’ mood. This is perhaps the most difficult to predict time frame in the typical
American trader’s experience, but a continuation of the established trend appears to be the most frequently encountered scenario.

4. 4 pm – 7 pm

During this time frame, banks in the U.S. will be closing beginning from the East coast, towards the East until California also lowers shutters, and trading eventually moves to Asia. Very often trading volumes move
rapidly lower, and volatility is reduced considerably as well, yielding many opportunities for strategies that prefer such conditions.

A forex trading strategy can be optimized with respect to leverage, take-profit/stop loss points, and also the technical aspect in the context of the time period during which a trader is active in the market. It should be
kept in mind, however, that these guidelines are by no means like laws. They are generalizations only, the market can contradict forcefully in response to new money or news shocks at any moment.