Peak Hours for FX Traders

04/18/2011 8:00 am EST

Focus: FOREX

Raghee Horner

Author, Forex Trading for Maximum Profit

World currency markets essentially trade six full days a week, but Raghee Horner tells what hours offer the most liquid and favorable conditions and when it may be best to simply step away.

Well, forex traders can theoretically trade 24 hours a day, so what is a day in the life of professional, independent forex trader? Our guest today is Raghee Horner. She’s here to talk about that. 

So Raghee, talk about a typical day for you. Is there a morning when you get up—and stock traders have the morning open—but how does a typical day start out for you?

Forex traders have the unique choice of sitting down and saying do I want to trade Asia, do I want to trade Europe, UK, or the US? So we really have four major financial areas that we can focus on. 

A lot of times a look at an economic calendar could be a really good thing to do each morning because that’ll pinpoint where the psychology might be coming in. 

So my prime time hours are usually between 8 am and noon Eastern Standard Time (EST), so I’m trading the overlap between Paris, Frankfurt, London, and New York. 

And if you look at pip-movement ranges between 8 am and noon, that’s usually the highest amount of pip movement for any that trades against a dollar.

Economic reports, New York’s open, the dollar index is trading, but on occasion, I’ll start looking at the Asian markets, and usually, when there’s going to be data coming out of China, Japan, Australia, there could be enough volatility.

Now if you take a look at the Bank of International Settlements, they had their release last year looking at where the turnover’s occurring. Europe and UK still account for by far the most turnover, but the pip-movement range, if you look, usually is the widest between 8 am and noon. 

So looking at turnover, but then looking at pip-movement ranges can give you a better idea of when you want to take advantage of the volatility.

But new traders might be better off looking at Asia because it is quieter, so it really depends on where you’re at. 

Now when you’re at home and you’re watching CNN or something and news, maybe it’s at 10 o’clock at night, and you see something happen in Egypt and you know that’s going to affect the currency movements, do you jump on the computer and see if you can find a trade? 

You know, I’ll look at the computer. I’ll look at the trends that are already happening. A lot of times I might already be in that market and it’s accelerating the trade that I’m already in, and in fact, instead of getting in, sometimes I’ll start peeling out at that point because the volatility gets much, much higher.

It’s not a matter of necessarily what is the opportunity, but sometimes it’s what’s the risk here for me being involved? So it might seem counterintuitive, but sometimes, I’m actually starting to lock in some profits versus looking for fresh opportunities.

NEXT: Thoughts on When to Walk Away and How to Measure Success

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With everybody being able to trade almost any market these days after hours and 24 hours, how do you find balance as a trader? Is it easy to do?

Balance, balance, I’ve heard of that! It becomes your lifestyle. It becomes what you’re doing, you hear news, and you’re right, it translates into opportunity.

I like the forex market because I can react at any time. You’re right, that 24-hour cycle, but I think between 12 and 6 pm Eastern, I actually walk away completely because once London’s left the party, unless something unusual is happening (Beige Book, FOMC), for the most part those six hours of the day are trading-free for me.

So we have to walk away and we have to realize that if we miss this particular opportunity, there’s going to be another one coming around the corner. So missing trades is just a part of life and dealing with it.

Do you set goals for yourself? Do you say, “I want to make so much money per day, per week, per month?”

Never, never, never. I think we get what the market gives us. We start assigning a value to that we’ll start squeezing something out of a trade that may not be there, so I try not to do that. Personally, I try not to do that. 

So how do you judge success for yourself? What’s a good day, a good week for you in the markets? How do you know?

A good day is when I haven’t thrown my mug through a monitor, right? But they’re all flat screens now, so no satisfaction breaking a tube! 

No, a good week or a good day is when I follow my plan. 

I mean, some people might say, well if you lost a trade, lost at a trade, that’s a bad trade. Not really, not if I followed my plan. 

So my idea is I’ve been doing this, following my plan for two decades, keep following it. It’s about being able to play tomorrow, being able to have the confidence, and obviously, the account, to play tomorrow.

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