The open provides a great time to trade the forex markets during high volatility. It is an edge you can exploit to give you an opportunity to be in the right place at the right time. Generally, a fast market can provide great opportunities to both make and lose money. Slow markets can provide opportunities but commonly, move so slowly and without direction that making money is almost nonexistent.
The market open can be a great time to see large moves and tend to go through a pattern as long as a news event doesn't push them around. As an example, when markets open there is a flood of buyers and sellers that can push them to an early extreme. The move quickly fades in the opposite direction about 30 minutes after the open as volume starts to subside. At some point, a direction for the day will form and a short or long-term trend will emerge. Try looking at a 5 minute chart sometime and see if you see this happen.
Below are the forex market hours:
- Japanese traders open 7:00 pm to 4:00 am EST
- London traders open 3:00 am EST to 12:00 noon EST
- New York traders open 8:00 am to 5:00 pm EST
That provides 3 times every 24 hour period to watch the opening volatility come in and see if the pattern emerges. Once you see it happen over and over you will quickly develop confidence and will be ready to profit from it. Having your trading plan ready will keep you prepared and your emotions in check.
One strategy to consider is buying after the cycle completes and trying to ride the trend for a profit. Consider this, as the market opens and price moves to an extreme high or low write down the price on paper. Wait until it moves back in the opposite direction at least fifty percent and rebounds to a new high or low. Once it surpasses the original price extreme take your position and ride the trend.
Entering the trade is just one component of being successful. To manage the trade you have to develop a strategy that won't turn a winner into a loser. Paper trade until you have your system down and confidence up.
There are many way to trade in any market. Finding the method that works for you is a key to being successful. Take the time to develop your own trading plan and paper trade it before you use real money. The ideas in this article are presented to help you formulate a plan and are not meant to be trading advice.
For more information and a free forex trading e-book go to http://bit.ly/vHrF45
Joe Tavenner CSP, CFPS has over 15 years of experience, a bachelors and Masters degree in Occupational Safety Management and an MBA in Management. He trades forex as a hobby and has a blog full of free resources, articles and product reviews. If you are looking for more forex information go to http://bit.ly/free4u123
No comments:
Post a Comment