Timing in Forex and Overlapping Markets
As in most endeavors, timing in forex is everything, too. We should learn when to trade and when not to trade in forex. This expertise spells success in currency trading and it has to do with overlapping markets.
We have to time trading with the trading in other countries because this gives us added forex odds. Good timing in forex is when markets are characterized by heavy volume. Without this timing factor trading would not be as profitable or worse, might prove a disaster. Thus, we choose a time when more countries have their forex markets open for trading at the same time. This is the optimal timing in forex.
Forex market is open 24 hours a day worldwide. Local currency markets all open from 8 in the morning to 4 in the afternoon, according to their local time or time zones. If we trade at a time when more local markets are open for trading worldwide there is heavy volume, especially at a time when there are overlapping markets.
Overlapping markets are those that have times of trading simultaneously happening or touching at the closing time of one and the opening time of the other. This is the most profitable timing in forex when volumes are high and there's an excess of pip movements. When overlapping markets happen trade experts take advantage and trade their best investment.
For example, from 8 in the morning to 12 pm (EST) we may trade EUR/USD or USD/CHF. It may also be the right timing in forex to trade GBP/USD. The overlapping markets here are between the US and the European markets - with the US opening its market while Europe is about to close its own. Another instance is at 1 to 3 in the morning (EST) when forex trading is usually at its busiest because the overlapping markets of Asia and Europe afford the right timing in forex to trade in their currencies - the Asian markets are about to close while those of Europe are just opening.
From 7 to 10 in the evening (EST) Australia and Asia have overlapping markets and the timing in forex to trade in their currencies is perfect. However, from 4 in the afternoon to 6 at dusk timing in forex is bad as there are no overlapping markets and the US market closes at the time.
Hence, it is vital to observe the right timing in forex for more profitable high volumes by trading when there are overlapping markets.