The basic advantage of Forex is considered to be its availability. Surely, it works days and nights. In theory it means that the currency profiteer always has equal trading conditions. However new comers should refrain from trading at any time as currency rates are strongly influenced by the time when major international stock exchanges open and work. That is why every trader should understand the influence of trade sessions on the sentiment of the market players and currency exchange rates.
Every country lives in its own time zone. Thus, Forex aimed at constant providing currency exchange transactions must work days and nights. As you already may know, there are Forex market participants that conduct certain actions in order to strengthen the currency of their countries. So, every trader should know the exact schedule of Forex trade sessions in order to understand when any given large stock exchange gets into a game influencing the exchange rate of the currency the trader works with.
If the trader understands the market situation clearly he can catch the trend at its very beginning. This principle is used by the traders working intraday very effectively. For you to apply it with high efficiency it is necessary to control the start of active trading at four major trading floors such as:
* New York.
London Stock Exchange can have the greatest effect on the exchange rates as its trade turnover is one of the largest in the world. So, it is very important to control the opening of London trading center in order to enter a new financial stream.
Another crucial moment is a lunch time. At this very period London goes for lunch and New York Stock Exchange starts its daytime operations. The best trading conditions are considered when two major players - London and New York - are present at the market at the same time. It is a period of strong movements that allow obtaining great profit during intraday trading.
Now we will figure out the most inefficient and even dangerous periods within the trading day every trader may face. As a rule, these periods are observed when the market volatility is weak and movements of currency pairs are not clear and dull. These are the periods of false signals which force the trader close his trading positions with losses.
The unhappy peak happens one or two hours prior to the closure of New York Stock Exchange. So, traders are recommended to start their trading activity when Sydney or Tokyo open up and new strong and stable financial flows appear at the market. These financial flows will help keep the trading position for quite a long period of time and gain much profit.
Not all the Forex traders can use Forex trade sessions graph effectively. It can be useful just for some of them. For example, this graph has no practical application for the currency profiteers who works with daily and longer timeframes. Even H4 does not give a possibility to effectively use the moment of opening of any major international stock exchange. These timeframes imply that the market signals are formed without taking into account intraday fluctuations occurring at the opening of large international financial centers.
At the same time while working with one-hour and shorter timeframes it is a certain crime not to turn periods of Forex trade session opening into one’s advantage. In that case the trader deprives him of the great chances these periods provide the market players with. Usually traders open their trading positions together with London and New York sessions opening. During the remaining time they search for the better opportunities to close the positions with the greatest profit. If they do not find any profitable opportunity they close their trading positions together with New York Stock Exchange.
Before we start studying the market indicators we can find out how trade sessions influence not only the Forex market, but also the other stock exchange markets.
Forex trade session indicator is created for currency profiteers to easier learn when one trade session ends and another one starts. This indicator shows all the movements in graph mode directly on the price graphs. At the present moment the most popular indicator designed for Meta Trade 4 (MT4) trading platform appears to be I-session.
I-session indicator is very simple in operation. It shows separate trade sessions in the form of backing rectangles of different colours. The more the volatility is, the higher the rectangle is. The width of the rectangle shows the duration of the given trade session. In fact, the price graph always contains three trade sessions:
Rectangles will superimpose on one another just like Forex trade sessions do. As it was mentioned above American trade session superimposes on European one and this very moment creates the best conditions to gain profit from currency exchange transactions. I-session Forex trade session indicator does not prevent from applying other indicators that help estimate the market situation.
The only weak point of I-session indicator is the incapability to switch between summer and winter time. However it is very easy to be corrected. You need just to enter the settings and put a correct figure by hand. It is also vitally important to take into consideration the difference of time at a terminal and a computer otherwise the opening of Forex trade sessions may not match.
So, I-session Forex trade session indicator shows everything in a handy way without overloading the currency pair graph. It allows trader concentrating his attention on trading rather than time control.
Complementary to the I-session indicator there are other Forex trade session indicators, however they do not possess all the advantages of I-session. Among them we can name Aliev Trading Time and Time II that can be applied depending upon a task set.