Five Most Important Hours For A Forex Trader!
The most heavily traded currency pairs in the global currency markets are the EURUSD, USDJPY, GBPUSD, USDCHF, USDAUD and USDCAD.
Now, did you observe one thing common between all these six heavily traded currency pairs? Yes, USD or the US Dollar. All these six major currency pairs are being traded against the US Dollar.
So, the importance of these five hours is due to the fact that New York is active during these five hours. New York is the financial center of the US economy. Any economic reports that are released during these five hours are going to affect the USD. Anything that affects USD will affect all the above six currency pairs that have USD either as the base currency or the counter currency. These six currency pairs are also known as the major currency pairs and almost something like 90% of the global currency transactions involve these currency pairs.
Looking at the data released by the International Bank of Settlement, more than 90% of the trading volume in the currency markets involves these six currency pairs. This makes these five hours the most volatile five hours in the forex market 24 hour day.
These are the most active five hours primarily because of the overlap between the United States, United Kingdom and the European currency markets.
This overlap makes these five hours the most active and the most volatile five hours. Think of 7 AM to 8 AM in each center as the premarket hours. Traders are getting active. Most will be going over their charts and determining the trading plan for the day.
It is also important for you to consider the other markets that affect these pairs. The overlap of the European, the London and the US Markets bring into play many other markets too that can affect the currency pair that you trade from amongst the six major currency pairs mentioned above.
Whatever, these five hours are considered to be the most volatile as well as active due to the overlap of the three important financial centers in the world.
Article Source: FxTradingStock.com
About the Author
Mr. Ahmad Hassam has done Masters from Harvard University. Get these 3 Swing Trading Systems FREE. Master these highly profitable Candlestick Patterns with this FREE 82 page PDF Candlestick Guide.
by: Ahmad Hassam
Total views: 19
Word Count: 354
Date: Mon, 25 Oct 2010
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