Synchronize Time and Place for Forex Trading

• ☑️ Currency pairs: Major currencies, Cross currencies, and Exotic pairs
• ☑️ Trading hours: Best times to open or close a trade.
• ☑️ It’s Money time: for all kinds of traders.

Currency Pairs

It’s time to learn more about the market.  Our step-by-step journey through Forex continues. So before jumping into the deep water, let’s wet our feet first, get used to the temperature…and focus on the following forex trading terms:

In forex trading, we trade in pairs. There is a constant struggle between the 2 currencies that make up the pair. For example, the EUR/USD: When the euro gets stronger, it comes at the expense of the dollar (which weakens).

Reminder – If you think that a certain currency will get stronger against another currency (“go long”, or “go bullish” in the Forex jargon) you should buy it. If you think a currency will get weaker (“go short”, “go bearish”) sell.

There are many currency pairs, but we are going to focus on 3 central groups:

Majors (Major currency pairs)

The A-List of currencies. The Majors are a group of the 7 most traded currency pairs. These are the most powerful and popular pairs in the market. That means that trades on these pairs are much more liquid. Majors are traded in high volumes, making the trends more significant. Majors are influenced by the news and economic events worldwide daily.

One of the reasons that these currencies are the most traded and considered majors is that they are currencies of developed and democratic nations, where all economic events are transparent and without manipulation by authorities. All majors have a common denominator – the U.S. dollar, which appears as one of the two currencies.

Most of the markets in the world hold U.S. dollars in their capital inventories, and also, many governments trade dollars. For example, did you know that the entire global oil market is traded in dollars?

It’s time to meet the majors:

Tip: For beginners, it’s wise to start with major currency pairs. Why? They carry less risk, have more stable and extended trends, offer numerous trading opportunities, and are thoroughly covered by economic news from all angles!

Cross Pairs (Minors)

Pairs that do not include the USD. These pairs can be very interesting trading options because by using them we cut off our reliance on the dollar. Minors suit creative and seasoned traders who are familiar with global economic events. Due to the relatively low volume of trades, they represent (less than 10% of all Forex transactions) trends on these pairs are often more solid, moderate, slow and free of strong pullbacks and reversal trends. Central currencies in this group are EUR, JPY, and GBP. Popular pairs are:

Example: Let’s look at the pair EUR/JPY: Say events with a negative impact on the Yen are taking place in Japan these days (the Japanese government is planning to inject more than 20 trillion Yen to help the economy and increase inflation), and at the same time we have heard some mildly positive news for the Euro at a press conference of the ECB president Mario Draghi. We are talking about great conditions for trading this pair by selling JPY and buying EUR!

When a certain instrument is gaining power (bullish) and you want to buy it (go long), you should search for a good partner – an instrument with weak momentum (one that loses power).

Euro Crosses

Pairs that include the euro as one of the currencies. The most popular currencies to go side by side with the euro here are (apart from EUR/USD) JPY, GBP, and CHF (Swiss Franc).

Tip: The European indexes and the commodity markets are very influenced by the American market and vice versa. When the European stock indexes move up, so do the US stock indices. For forex, it is quite the opposite. The USD goes down when the Euro goes up and vice versa when the USD goes up.

Yen Crosses

Pairs that include the JPY. The most popular pair in this group is EUR/JPY. Changes in USD/JPY or EUR/JPY almost automatically cause changes in other JPY pairs.

Tip: Getting familiar with pairs which do not include USD is important for 2 main reasons:

• Having new options to trade with. Pairs of these groups create new trading alternatives.
• Following their status will help us make trading decisions on the majors.

Not clear yet? Let’s elaborate: Say we want to trade a pair that includes USD. How do we choose a partner for the USD? Assume we are having a difficult time deciding on which pair to trade – USD/CHF or USD/JPY. How to decide? We will examine the present status of the pair CHF/JPY! That makes sense, right?

That way we can figure out which one of the two currencies is going up and which one is on its way down. In our example, we will stick with the one going down because we mentioned that we are looking for a currency to sell to buy the rising dollar.

Exotic Pairs: Pairs that include one of the major currencies together with a currency of a developing market (arising countries). A few examples:

The volume of activities within this group is very low. That is why you need to bear in mind that the transaction costs that the brokers charge on trades (also known as “the spread”) with these pairs are usually a bit higher than the costs being charged on the more popular pairs.

Tip: We do not advise you to take your first steps in Forex by trading these pairs. They fit mainly experienced brokers, who operate on very long period trading sessions. Exotic traders are well familiar with these exotic economies, using market forces to follow fundamental systems which you will meet later on, in the fundamental lesson.

Currency Distribution in the Forex Market

Trading hours – Time in Forex Trading

Forex, unlike traditional stock markets, operates 24 hours a day, five days a week. However, trading activity varies significantly depending on the time zone.

The provided table outlines the peak trading hours for these major financial centers:

• Sydney: The Asian trading session overlaps with the end of the previous North American session.
• Tokyo: The heart of the Asian trading session, with significant overlap with Sydney.
• London: The London session is the bridge between the Asian and American markets, often considered the most liquid.
• New York: The North American session is the largest in terms of trading volume.

Why is this information important?

• Market Overlap: Understanding when different markets are open helps identify periods of high volatility.
• News Impact: Major economic news releases often occur during specific trading hours.
• Trading Strategies: Some trading strategies benefit from specific market conditions, such as low liquidity during Asian hours or high volatility during the London Open.

This table provides a clear view of the market hours for each major financial center in both time zones.

The busiest trading hours are 8-12 am New York time (when 2 sessions are simultaneously working at the same time – London and N.Y.), and 3-4 am New York time (when Tokyo and London are simultaneously active).

The busiest trading session is the London session (the European session).

The Sydney session is more local and centralizes low activity and, meaning it is great if you live in this part of the world or are familiar with the socio-economic and political conditions in Oceania, but if you’re not it is best avoided.

Tokyo

The center of Asian markets. The Tokyo session is an active one, approximately 20% of all global activity during the day takes place at this time. The yen (JPY) is the third most powerful currency (after the USD and EUR). 15-17% of all Forex transactions include JPY. Major forces in Asia are mainly the central banks and gigantic Asian commercial corporations, particularly the ever-growing Chinese financial sector and the Chinese traders.

Popular currencies in the Tokyo session are JPY of course, and AUD (Australian Dollar). The first economic news to be released during the day comes from Asia. That’s why opening hours usually encourage strong activity, and set the tone for the following sessions. Impacts on the Tokyo session can come from N.Y. closing (the session before), major news coming from the Chinese market, and events happening in neighboring Oceania. The Tokyo session starts at 7 pm N.Y.T.

London

The center of the European financial market in particular, as well as the global market in general. Above 30% of all daily Forex transactions take place in London’s session. Due to its high volume, London offers many options and opportunities, but also higher risks. Liquidity is high and markets can be volatile which offers great winning potential if you know how to trade properly. Trends in this session can look like a roller coaster. News and events from all over the world feed into this session. Many trends that begin in the London session keep their momentum in the following N.Y. session by moving further in the same direction. We recommend entering this session with positions on the majors, and not on exotic pairs or currency crosses. You should also know that commissions being charged on the majors are the lowest. The London session opens its doors at 3 am N.Y.T.

New York

a very significant session, both due to its wide range of activity and because it is the center of trade for the USD. At least 84% of global Forex trading includes USD as one of the traded instruments that make up the currency pairs. The published daily news is extremely important, influencing all 4 sessions. This factor, together with the parallel European session in the morning hours, makes these hours (till lunch break New York time) the busiest hours in this session. Starting at noon time this session weakens and on Friday afternoon it goes to sleep for the weekend. There are times in which we can still catch a lively trade because sometimes trends change direction just before closure.

Remember: The busiest trading hours are when 2 sessions are working simultaneously, especially the intersection hours of London + N.Y. (London’s closing hours are usually very volatile and characterized by powerful trends).

Daylight Saving Time Considerations

Keep in mind that trading hours can shift due to Daylight Saving Time (DST) adjustments. While New York and London observe DST changes, Sydney and Tokyo do not. This can cause shifts in the overlap periods between sessions. Always check for current local time changes to accurately assess trading hours.

Tip: The best days to trade are Tuesday through Friday, particularly during New York’s early afternoon hours when both London and New York sessions are active.

Why Forex is the Most Accessible and Profitable Market for Traders of All Kinds

So now you understand why Forex has become the most popular market in the world. You also understand how inviting and convenient it is, for all kinds of traders, at any hour, in any place, and with any amount of money. Forex offers massive earnings potential for traders of all types.

• Casual Traders: For some, Forex is a great way to make extra money on the side or boost their overall income.

• Long-Term Investors: Others use Forex as a smart way to grow their savings over time, finding it more rewarding than letting money sit in a traditional savings account.

• Full-Time Professionals: Some traders dive into Forex as their full-time job, analyzing the market deeply to aim for steady, reliable profits.

• Adventurous Traders: Some thrive on high-risk, high-reward strategies, looking to make big gains quickly by leveraging their capital and seizing dynamic trading opportunities.

Each day, more than $7 trillion is traded daily in the Forex market. More than 80% of Forex transactions are executed by small and medium traders!

Examples of common objects are gold, silver, oil, and wheat (Prices of these goods have risen dramatically in the past few years, in tens and even hundreds of percentages!). In its essence, commodities trading is similar to Forex, and today, almost all popular brokers offer commodities trading as well as Forex. We’ll look at this topic in more detail later on in the course.