The Foreign Currency Exchange (Forex) market has become a worldwide investment phenomenon. Countless savvy traders from every corner of the globe have discovered that wise investments in Forex pay off rapidly and handsomely. One reason that Forex trading is so dynamic is because of its truly global nature.
Throughout the business week, there are always Forex markets open somewhere. To see the Forex field at its best, you have to look for overlap times – those golden hours when many markets are open simultaneously.
The reasons why overlap times are so important are fairly straightforward. For the most part, you can figure them out via common sense. The trading population swells significantly during the overlap hours, for example. When Forex traders on two different continents are ready and eager to trade, a lot of business gets done!
All of those traders chomping at the bit translates directly into a higher volume of trade. More money is moving, both in terms of total number of transactions completed and in the size of the individual transactions themselves.
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This flurry of activity also means that the Forex market shifts more rapidly during overlap times. This is actually a good thing for most Forex traders. The traders who are out to make a serious profit are looking to accumulate thin but significant margins on many trades, and this is easier to do when the market is moving quickly.
When, exactly, are these overlap hours? There are three major ones of note. The first is the North American/European overlap. This occurs in the morning hours, from 8 to 11 AM EST. Major trading centers in New York, London, and Frankfurt are all active. There’s an evening overlap from 9 to midnight EST when Asian and Australian centers are open simultaneously. (Australia being, of course, a huge player in the Forex market) Finally, there’s a late-night overlap from 12 to 3 AM when both Asia and Europe are trading.
As you can see, the overlaps are a function of geography; one might expect a North American/Australian overlap to exist, but the Pacific Ocean is simply too big. By the time markets in Australia and New Zealand open up, the major North American trading centers (which are mostly on the east coast) are already closed.
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These overlap hours are the best times to hit the Forex markets hard. Overlap time is a particularly good place to try out new trading strategies and experiment with short-term tactics. Thanks to the above-mentioned speed and volume of trading, the strengths and shortcomings of any particular strategy will become apparent very quickly during the overlap hours.
You don’t have to get into more than a few overlap time trading sessions to realize that Forex is a very different game during these busy periods. The overlap hours represent the very best times for an enterprising trader to chase profits, track market shifts, and see big shifts in the markets. You may have to alter your trading schedule to take advantage of the overlap times, but the results are often worth it!
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