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Identify Key Trading Times To Maximise Your Profit Potential From Forex

|Includes: iPath GBP/USD Exchange Rate ETN (GBB)

The market hours of the currency markets are an important factor that you will need to consider when trading on Foreign Exchange. While it is a known fact that you can trade around the clock on these markets, this is not always the best way to trade. It is vital that you are able to align your strategies to take advantage of the best trading times. This will not only lower your risk levels but will also ensure that you are able to make the most from your strategies. As a new trader it is essential that you know both what and when to trade.

The trading hours of the currency markets run continuously throughout the week, but are noticeably sub divided into a number of distinct trading sessions. Each of these market trading sessions has its own set of characteristics which are the result of the dynamics of each regional market. This is because each trading window coincides with the trading hours of the financial markets in each region. So for example, when the Stock markets open in the United States, the activity on the Forex markets also increases. This reflects both the impact that news and transactions on these markets have on the Foreign Exchange markets as well as the propensity for deals to be brokered at this time.

The key decision that an individual who is trading on Forex has to make is not only which strategy to trade, but also when is the optimum time to trade it. There are many systems and approaches that can be used to form a strategy for the markets. However the successful application of these will very much depend on identifying the best time to make use of them.

Strategies that target market range breaks are a popular with traders and often have a defined time of the day when it is best to trade them. With breakout trading this is most commonly the opening of a market session. The reason for this is that market tends to peak at these times and therefore traded volumes also tend to be correspondingly high.

At this time of day traders will seek to reposition their holdings following overnight news and react to the latest economic and political developments that have occurred in the previous time zones. In addition this time of day is one of the most active in terms of the release of the latest market data concerning the local regional markets. This can have a great impact on the perceived valuation of a currency and therefore the direction that a currency pair will move. This provides the opportunity to pocket large profits for the trader if they are able to identify the most probable early directional moves that a currency pair will take.

This impact from taking a position during the early part of a trading session can be profound. Often directional trends that are set at this time of the day will perpetuate into subsequent sessions. So not only can good pips be booked from early market breaks, so too positions can be held for longer periods, often until the end of the day. Essentially making a good call at the start of the day can see the opportunity to jump on key developing trends that persist. This approach can therefore make for a simple and highly effective trading strategy.

You can find out more about trading strategies that target market range breaks at the opening of the London Forex markets by visiting