Hope you had a great bank holiday and that you managed to catch some sunshine.
I’m currently rather dazed after being away for the weekend for a friend’s stag do. It was good fun, but my brain feels like I’ve just watched 24 hours straight of the X Factor – i.e. pretty dead. I was not alone in uttering “I’m getting too old for this” at various points throughout the weekend!
Thank you for all the kind messages about the Canadian plans and for the offers to take the trading DVDs off my hands. I’ve offered these out on a first come first served basis, but I’ll let you know if anything remains.
Speaking of the Canada trip, I had a number of people ask about trading time zones and how this works practically. I suppose one of the attractive things about trading is that it can be done from anywhere in the world. The global nature of financial markets also means that when trading from the UK, there will be market action open to you at some point throughout the day.
Here’s a quick guide to the various markets and their trading times:
Forex market trading times:
Forex is indeed a 24 hour market with no real official opening hours like the stock market. However there are notable ‘sessions’ throughout the day as various countries start their trading day.
We’re actually fairly lucky in the UK as we get the lion’s share of the action.
Forex is broken up into three main sessions; The Asian session, the London session and the US session.
The sessions run approximately as follows (Times are GMT not BST):
Asian open: 00:00
Asian close: 09:00
London open: 08:00
London close: 17.00
US open: 13:00
US close: 22:00
There is a period of overlap with each session, but perhaps the biggest period of activity is the overlap between the Asian and London sessions. The London session is probably the best time to trade forex with the Lion’s share of the volatility and action. You get the biggest moves around this time.
For example, here’s the average pip range of the GBP/ USD and USD/ JPY during the three sessions:
Session GBP/ USD USD/ JPY
Asian: 79 66
London: 99 74
US: 78 60
It is not as though the other sessions are dead, far from it, it’s just that you get more action during the London session.
I’ve found the trading action to vary in time depending on the day and whether there are any economic announcements due. I’m usually up for 6:00 BST, partly to catch the early morning moves and partly because I like to get up early anyway. I find it a good time to work as there are less distractions around this time.
Some days you get action right from 6:00, some days the forex markets don’t really get going until after 09:00. I find the US session can be quieter, but again this depends on whether there are any big economic announcements. I don’t trade the news, but big announcements like US interest rates can certainly juice up a slow market.
It also depends on the pairs you are trading. I like to trade the EUR/ JPY and the GBP/ GPY because they have some great moves at the times I like to trade (early in the morning). Other pairs such as the USD/ JPY can be quiet after the London open until the start of the US session.
If you are trading based on End of Day prices, then all this doesn’t matter to much. The good thing about the amount of action available in the early London session is that you can catch some good moves before you go to work.
Commodities don’t have a single exchange that they trade on, so you can get one price in New York and a slightly different price in another part of the work. This means they can be effectively 24 hours as well, although like the forex markets different time zones can have more action than others. It does depend on the commodity though, for example oil prices might have made their day’s move by the start of the US session on some days, but on other’s US oil inventories can be the announcement to wait for after Midday.
Stock markets & Shares
The FTSE opens at 08.00 BST and shuts at 4.30 PM BST. It goes quiet until around 1 PM when US traders get to their desk and start reacting to their own economic data and any significant moves in Europe. Then US markets open at 2.30 PM and close at 9.00 PM.
US traders go for lunch around 5.00 PM BST and the action hots up again around 7 PM BST, meaning UK traders can get some good moves in the evening if they want to trade intraday.
The cash index for each country (i.e. The FTSE) has set opening hours, but index futures are more less available 24 hours. Spread betting companies offer prices on the FTSE 100 before it officially opens based on the early futures market prices.
For end of day trading any stock market, you’ll find that you have plenty of opportunities to put your trades on. For intraday trading, UK shares can be tricky if you have a full time job, but after work around 7 PM can offer some great moves.
I hope this helps you choose a market to trade
I broke one of my golden trading rules this morning of not trading when tired. I messed up a couple of limit orders and in general made a right pigs ear of my trades. I took some trades on the GBP/ JPY and USD/ JPY early this morning, but I’d apparently lost a fair chunk of my IQ after the weekend stag do.
I got a lucky with one trade and made a profit, but I take no comfort from such trades because I know they could have easily lost me a lot of money.
Apart from this, I’m still enjoying my forex trading and I’m pleased with my trade on the S&P 500 last week. Right now I’m out of the market on the S&P 500. Last time my thought was that the first break out would be a fake and thankfully this turned out to be the case. We’re back to range bound action again, but I think this time a breakout could be the real deal. I’ve been leaning to the downside with all this as I’m highly sceptical of this rally.
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This week’s hot trading buttons
Today’s top announcements are US ISM manufacturing and pending home sales. Tomorrow the UK house price merry go round continues with the latest prices from the Halifax. Expect lots of headlines about the imminent recovery of the UK housing market which ignores seasonality and the inaccuracies of some of this month on month data.
Wednesday afternoon is when the week really hots up. We’ve the warm up act for Friday’s Non Farm Payroll with ADP non farm employment change. Following this we have the release of the minutes from the last FOMC meeting in the evening.
On Thursday we’ve got the ECB’s rate decision and US unemployment claims and on Friday it’s the big one – US Non Farm Payroll numbers. All in all, a busy week!
“Learn to fail with pride – and do so fast and cleanly. Maximise trial and error – by mastering the error part.” – Nassim Taleb