We have seen recently in our articles of training that you need to know in what phase the market is. Consolidation, distribution, accumulation etc… These phases can last for several months. But they also need to know what are the phases inside the day.
If you look at the evolution of volumes and volatility during the day on the forex, you will be able to easily spot when the Americans come to the track, in the early afternoon. It is at this point that the bulk of the volatility of the day is carried out.
Here is the description of the different trading hours for forex and the larger markets in general :
TOKYO – LONDON
The liquidity during this sale is pretty low for several reasons. Typically, there is not a lot of movement during the transfer in the asian region. On the other hand, the traders Europeans are just getting to their offices and take a little time to take the temperature before you press the button.
It is the right time to take a position in anticipation of the disposals of European and American because the spread is low.
LONDON – NEW YORK
This is the assignment the most eventful of the day as the traders of the two largest financial centres in the world are at work (London and NY).
The large movement going on usually (80 % of cases) during this period, especially when the news out of the US are published. If a trend begins during this period, there are chances that it persists for a moment as traders Americans are beginning to place after watching this that it is not during the transfer in europe.
It is necessary to be careful at the end of this assignment as traders Europeans tend to close their position at the end of the day, while the USA are always at the track. From 19h, things become more calm, but the volatility may last until the end of the assignment to US if we had important news during the day.