Time periods that foreign exchange traders should pay attention to

Time is an important factor in trading. Rational use of time can avoid trading risks and improve trading success rates. This session of Foreign Exchange Academy will talk about the time period that traders need to pay attention to.

foreign exchange marketIt is a 24-hour non-stop market. The most obvious thing that distinguishes it from other trading markets is the continuity of time and the unconstrained nature of space. The main fluctuations and trading hours start in New Zealand on Monday and end in Chicago on Friday. There is also a small amount of foreign exchange trading in the Middle East on weekends, but it is basically negligible. It belongs to normal interbank exchange, not normal speculation.

As we all know, if there is a market, you can trade, but it does not mean that you can trade. Each trading session in the foreign exchange market has its own laws and characteristics, so we need to understand its laws to avoid trading at inappropriate times, and to improve the success rate of trading while avoiding trading risks.

One.BCR ForexBefore and after major events

As a Forex trader, the volatility of the market is the basis for making trades, as traders cannot profit from a market that never wavers. But it can be very dangerous for traders who have experienced making huge profits from a highly volatile market, especially for novice traders. Because they have witnessed how increased volatility can create profits out of thin air, observing that higher volatility equals higher profits. Volatility can make traders money, but trying to trade from an event with random outcomes and market reactions is not the case.

Forex traders, especially short-term foreign exchange traders, will specialize in trading in a timely manner before and after the release of important economic news, because the main feature of news trading is that a country's currency can rise or fall sharply in a very short period of time. Huge gains deeply attract foreign exchange traders and investors, but there are various risk factors related to news trading. The main danger comes from the speed of trading, otherwise you will lose money.

In addition, when the market is volatile, slippage is very easy to occur. For example, when something big happens, the market price is very easy to be affected, resulting in orders not being filled at the most suitable price. Violent market fluctuations also mean that liquidity becomes low, which makes orders unable to be executed at the originally specified price. The maximum slippage usually occurs when something big happens.

As a novice trader, you should avoid trading during major events, such as during a Federal Reserve meeting. Of course, it is very tempting for traders when the market is volatile, but trading at this time is very risky. If a trader has already made a trade, they may face greater risk than expected due to a lot of slippage.

The first and last days of the new trading week

The foreign exchange market is a 24-hour market. But it is closed every weekend and statutory holidays. The specific closing time on weekends is from 4:00 am Beijing time on Saturday to 2:00 am Monday in winter time; 4:00 am Beijing time on Saturday to 3:00 am Monday in summer time. Weekend suspension is mainly related to the quotation pattern of the foreign exchange market, foreign exchangebrokerThe quotes are not fabricated out of thin air, but are formed on the basis of quotes from the liquidity providers (banks and trading institutions) they work with. On weekends, these institutions are on vacation, and foreign exchange brokers naturally cannot get quotes.

Usually, the first 24 hours of each new trading week are relatively low in volume. Market participants gradually resume trading after 48 hours.

Liquidity also tends to be low in the last 24 hours of a new trading week. We know that liquidity is the soul of a market. No liquidity means no quotes and no orders can be filled. And there may be some unexpected news on Friday, resulting in a large spread when the market opens on Monday, which is a risky time to trade.

Therefore, in the new trading week, Monday and Friday are two less suitable days for trading, and the latter is worse than the former.

III. When the mental state is not good

Investors in foreign exchange trading, the ultimate goal is to make a profit. On the one hand, it is necessary to accurately predict and implement the foreign exchange market conditions; on the other hand, it is necessary to maintain a positive psychological state. Psychological factors have a great impact on foreign exchange trading. In actual trading, it is always difficult for many people to avoid the impact of negative emotions, which leads to decision-making mistakes.

Forex trading is a game of mental discipline. Those who can control their emotions can generally stay in the foreign exchange market longer.

But no matter how disciplined a trader is, there will always be a period of poor health, such as physical discomfort, insomnia, or too much work. So there must be good health, a smart heart cannot work in a weak body, like Apple CEO Steve Jobs resigned.

Another situation is when the trade is on a losing streak. The most important thing for foreign exchange investors to trade is to be patient and wait patiently for the exact buy or sell-out point. When a trader makes three or four consecutive mistakes, he will inevitably be highly vigilant, and it is easy to be impatient and make wrong trading decisions.

If a trader is going through a losing streak, one of the best things to do is to take a break and sort out your messy thoughts. When deciding to go back to trading, try to cut your trading capital in half until you regain confidence.

summary

As a foreign exchange trader, it is crucial to know when to trade and when to avoid trading. When the market is too volatile or the market is illiquid, you should try to avoid trading, reduce trading risks, and enter the market when it is mature.

The first time period is before and after major news events. These events include non-agricultural, consumer price index, producer price index, central bank meeting minutes, interest rate decisions, and so on.

The second time period to watch out for is the first and last days of the trading week, with Friday being the more important of the two. Trading on Friday can be risky with significant volatility. As for Monday, the market volume may not be as large as it has just recovered from the weekend suspension.

Trading is a mental state game. I think it involves 80% mindset and 20% action. So when a trader feels like he or she is not at his or her best, just sit on the sidelines. It is better to miss a trade or two than risk losing a trade and cause an emotional meltdown.

In general, Tuesday to Thursday are the best trading days of the week. It is important to pay attention to the major news events before and after, and finally ensure that the overall physical and mental state of traders remains excellent.