When Does The Forex Market Move?

Techinical gaps

Everybody want to know when currency market move. But know one find why and when Forex market move.Lets find when does the Forex market move.

                        When Does The Forex Market Move?

Another valid question, but often ignored. The quick answer is Currency Market moves when the people of that country or countries are up and starting their day, that’s when you will see movement, liquidity, and pure price action. Try to trade GBP/USD around Asian Session or Late US Session. Not only you won’t see much action, but because of the lack of liquidity, market may move in ranges, not enough to give you a decent profit, nor enough to stop you out.

One of the most important factors that have discovered and enhanced trading is to realize the importance of time. As a matter of fact, I have a theory that seemed to work very well for me, and I named it the “Lunchtime Reversal”. Simply put, every lunch time hour for each of the major markets, namely the London, Tokyo, and New York, you will see signs of market reversal, because these professional traders who have the ability to influence market, need to square their positions so that they can go out for lunch. Therefore, there are two immediate applications for it:

1. Close your trades around lunch time knowing that the market is about to reverse its gains.
2. Stay in the trade (longer term) and know that lunchtime reversal is only temporary. Long term trend will resume in a few hours.

This simple knowledge has helped me time and time again. When I am on a longer term trade and all the sudden market reverses without a valid reason, but if it coincides with one of the lunchtimes, I would still keep my original position and ride it out knowing what was going on. On the other hand, when I see market hitting a strong resistance/support area around lunchtime, usually by looking at other confirmations such as the daily ranges, fundamental news, and market sentiment, I would enter a reversal trade. But without the time factor in the first place, I would NEVER have entered the trade, as we don’t usually know how far the market is going to go; it’s hard to predict a top or bottom, but it’s not that difficult to predict WHEN.

Other important time filters to be aware of, aside from the obvious news releases, are the EQUITY MARKET OPEN/CLOSE, or “Stock Market Jitters” as I called it, which may move the market drastically one way or the other for 5~10 minutes before and after the opening bell. Knowing what to expect during this time can help you hold on to a profitable trade or adjust your stop to not get stopped out due to a fluke in the market.

Another important concept is to become familiar with what kind of movement to expect during each major trading session. For instance, most European currencies will move in a range during Asian Session, by identifying the range, you can enter trades at top/bottom of the range going with the longer term trend.

The principle behind why these currency pairs move in a range is based on liquidity. When there isn’t enough liquidity to move a currency pair, such as during the Asian session, movements of the European pairs are confined in a range with most of their gains reversed just around London open during most regular trading days, with some exceptions.

Concept that have to Remember

  • Trade currency pairs at the time when the people in that country are starting their day.
  • Always use time filters when entering a trade. It is difficult to predict a top or a bottom, but it is easier to predict WHEN a top or bottom will be formed (Intraday).
  • Aside from fundamental news releases,always be aware of Equity Market Open/Close when trading.

Happy Trading………….

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