Published by Sebastian Preiss on March 2, 2016

Best time for currency trading

Timing is really the most important consideration when it comes to a successful binary option trade. If you want to win, you have to make your investment at the optimal moment. That’s really what it all comes down to.

With all binary options you need to enter the market at just the right moment. You also have to invest in an option that has the appropriate running time. This also applies when it comes to options based on currencies, so called Forex trading.

So, when is the best time for currency trading? Certain features of currency trading are unique, and they make it possible to trade in currency options when other options are not available. This can be a chance to make money. In this article you learn how.

The asset that never sleeps – what is the best time for currency trading?

One big difference between currencies and many other assets is that currencies are traded all round the clock. Because of this, the price of currencies is constantly moving. And moving prices means an opportunity to trade on a binary option.

Whereas a stock is only traded during the opening hours of the stock exchange it is listed on, and as a consequence only experiences changing prices during this time, currencies are always in motion. All sorts of events, all over the globe, can influence the value of the major currencies like the US dollar or the euro.

In other words, time zones and opening hours do not close the currency market for traders at any time.

But this, of course, does not mean that it doesn’t matter when you trade in currencies. Obviously, there will be more movement in the market price of the US dollar during working hours of the New York stock exchange, and the same is true for the Euro and the big European stock exchanges in Frankfurt and Paris.

Two currency strategies with different timing

So, currencies can be traded all around the clock during the working week. This opens up a lot of possibilities. There are many strategies involved in trading currency-based binary options. You have to make many strategic decisions, including:

  • Choosing between high risk or low risk
  • Choosing between trend following or swing trading
  • Choosing between different types of options
  • Choosing a good money management strategy
  • Deciding whether to rely on binary signals

The list goes on. When it comes to timing, there are in particular one strategic decision you need to make for currency trading. That is the choice between these two possibilities:

  1. High volatility
  2. Low volatility

In this context “volatility” simply means how much movement there is in the market, that is to say how much the price is moving.

Now, high volatility occurs when there is a lot of trading going on, in other words, when the trading volume is high. The opposite is true for low volatility.

Which one of these two you choose is up to you, and depends on your overall strategy and approach to trading. For our purposes, looking at the best time to trade currencies, what’s important is simply pointing out that currencies have predictable times of high and low volatility. You should be aware of them, and adjust your trading accordingly.

A currency will have high volatility when its home markets are open. That means, in the case of the US dollar and the Euro, as we already have mentioned, the New York stock exchange and the stock markets in Frankfurt and Paris, respectively. When it comes to the British pound, the London stock exchange is the most important, whereas Tokyo is most important for the Japanese yen.

So, if you are looking to trade when there is low volatility in the price of the Euro, you simply wait until the major European markets close every afternoon, CET. If, on the other hand, you prefer high volatility, you make sure to do your trading during business hours in that time zone. The same, of course, goes for all the other markets and their corresponding currencies.

 

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