Best Times to Trade Forex

Before you can understand the best times to trade Forex you need to understand the basics of this type of market. Forex is actually a shortened version of foreign exchange. This relates to the trade and exchange rate of two international currencies. For example a Forex trader might exchange U.S. dollars for Japanese Yen, just as a hypothetical scenario. There are many different things that come into play when it comes to the worth of any nation’s currency. Elections, natural disasters, importing and exporting — these are just a few examples. Forex can become very complex, there is both potential for great loss and great profit.

If you travel internationally you will right away get an idea of how Forex works when you exchange your home currency for the currency of the country you are visiting. You may find that your money is worth less, or more, in the country you are visiting. You can even see this impact without leaving home. Imported goods may rise in price to compensate for unfavorable Forex changes in that country’s currency. As you can see, changes in the foreign exchange market can be good or bad for a country, its people and investors based on a variety of different factors.

Forex is constantly changing, so be prepared for an up and down ride if this is an area of investing you are interested in. One thing you should know about Forex that makes it different from other markets is that it operates 5 days a week, 24 hours a day. Of course, trading activity and prices do not remain the same and there are times that are better than others to trade Forex. One reason for this is because certain times of day are more active than others in the foreign exchange market. Learning more about the busiest markets and their most active times is key when it comes to choosing the best times to trade Forex.

The biggest market right now is London, with the second being the United States. Some of the most widely traded currencies are the GBP, Euro and USD. With this being said, you can deduce that the most active time to trade is during the hours that London and the U.S. are trading. In London, trading starts at 8 UTC and ends at 16 UTC. In the same time format, the US session begins at 13 UTC and ends at 22 UTC. During this time, the most trades are made with the following currencies: USD, EUR, AUD, GBP, JPY, CAD and NZD. The three hours of overlap time between London and the United States is peak trading time, if you are trading currencies which include the USD.

Of course no decision should be made unless you are an experienced investor or unless you have consulted an experienced investment professional. The Forex market can be unpredictable, and like all markets you can gain or lose money. The advice in this article should not be used as a substitute for professional guidance.

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