How to Set a Forex Trading Schedule

From market overlap to news release cycles, understanding how to create a Forex trading schedule can help you to invest more effectively.

Forex is unique. For starters, positions are generally held for a shorter amount of time than in a traditional investment transaction. Day traders can make large profits by making trades that react to daily events and real-time global news releases. Forex is also much more reliant on the trader being involved in daily or weekly activities than the stock market would be. Due to the involving nature of this investment option, Forex traders must create and utilise a customised trading schedule to ensure efficient and responsible management of their investments. Whether you are new to the world of currency trading or you’ve been doing it for years now, keep the following tips in mind when establishing your own Forex trading schedule:

Four Time Zone Awareness

While the New York Stock Exchange operates on what can be considered normal business hours, the foreign exchange market continues to churn around the clock.  To accomplish this, the Forex market is open during the normal business hours of four different time zones around the world. Many new Forex traders who are aware of the four time zones involved take global news releases as an excuse to conduct knee-jerk trades. This can quickly deplete reserves if not kept in check, and it can burn out even a veteran trader in no time at all. 

Market Awareness

Between the hours of 6pm EST on Sunday and 4pm EST on Friday, there is money to be made. That said, not all trading hours are created equally. In order to make money in the Forex market the smart investor will create a schedule that capitalises on market overlaps, or the time in which more than one market is actively trading. With one market open, currency pairs will form tighter bonds and movement is generally limited to a pip spread of maybe 25-30. When two markets are open at the same time, the same currency pairs may see 60-70 pips in spread. 

The US market (New York, 8am to 5pm EST) is a high-volume trading platform due to the US Dollar being used in more than 90% of currency trades. Watching the NYSE can provide insights into the US Dollar’s value, which will in turn affect the viability of a Forex trade.

Understand the Overlap

With the US Dollar and the Euro seeing action in countless trades, the US and London market overlap must be maximised. 70% of trades occur when these two markets overlap, which points to an ability to make money during this period of volatility – not before or after. From 8am until noon EST is a great time to trade (US/London overlap), as is 2am to 4am (Sydney/Tokyo overlap), and 3am to 4am (London/Tokyo overlap). 

News Cycles

Global news events are a powerful driver of currency valuation. Hundreds of relevant economic news releases occur each week, yet they don’t all have to take centre stage on your investing radar. Prioritise these news releases and pay close attention to global interest rate movements, central bank meetings, GDP data from specific nations, consumer confidence releases, trade deficits, and CPI data. These economic indicators can and do influence the valuation of currencies and should be kept on your schedule. 

In summation, creating an effective and easy-to-manage Forex trading schedule isn’t difficult, but it does require a basic understanding of the four key time zones/markets involved, the most beneficial times to trade (market overlaps), and when/how to utilise various news and market releases to capitalise on currency valuation shifts. By doing so, the science behind trading in Forex becomes more visible to the trader.

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