Odd time zone? (NZ?) be Swing? or Position Trader?

Leverage: 3% maybe 5% no more: Learn to trade successfully without leverage

$1000 min balance

Make sure you open a forex spot account and not a forwards or futures account.

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Thanks babypips.com

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Quotes: BaseCurrency/Quote(or counter)Currency = rate

e.g. GBP/USD = 1.51258

rate – how much of quote currency to buy 1 unit of base currency

• You buy the pair = you buy GBP with USD
• If you think the base will appreciate against the quote you buy
• Buying = taking ‘long’ position
• You sell the pair = you sell the base for USD
• If you think the base will depreciate against the quote you sell
• Selling = taking ‘short’ position

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Spread:

Dealer offers a bid & ask price

• bid = what dealer will pay you for the base currency (you are selling) paying out in the quote currency
• ask or ‘offer’ = what dealer will charge you for the base currency (you are buying) in the quote currency
• Bid usually < ask
• Bid – Ask = Spread and represents dealer margin

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• Margin Trading
• Rollover rates

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Broker Types

ECNs also allow their clients to see the “Depth of Market.” Depth of Market displays where the buy and sell orders of other market participants are.

 

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FX Market: Types of Orders

When investors trade in the FX market, their first step is to place orders with their brokers to open or close a position. Or if trading for themselves, to open or close a position on their trading platform. The orders placed could be any of the following types of purchase orders:

Market Order: In a market order, an investor places an order to buy or sell a currency at the existing market price. These orders are normally executed in a matter of seconds.

Limit Order: In this FX Market type of order, an investor places an order to sell a currency at a predefined price. This order is placed to lock in a gain. A limit order is especially useful for a low-volume or extremely volatile currency pair, as it gives investors control over the sale price. This order is also useful when the investor expects the market to reverse its trend in the near term. The limit order remains active until the currency reaches a pre-specified price, after which it is automatically executed to clock in the gain desired by the investor.

A limit order has two variables, the time for which an order is active and the price level. An order that an investor specifies should remain active till he/she closes it is called Good Till Canceled (GTC). If an order remains active till the end of a trading day, it is called Good for the Day (GFD).

Stop Loss Order: A stop loss order is one that is placed to close a position before a currency value falls below a level settled by an investor. This order is placed to limit a possible loss in a currency pair transaction.

Stop Entry Order: In a stop entry order, an investor buys a currency above the market price or sells below the market price at a level settled earlier. The investor also specifies the duration for which the order should remain active. Such a purchase or sale is made only when the investor believes that the market would continue in the same direction. This type of order is usually issued to limit a possible loss on a transaction.

OCO (One Cancels Other) Order: An OCO order is a mix of two limit and/or stop orders in which an investor has specified the price and the duration for which the order should remain active. The OCO is such that when one order is executed, the other is cancelled immediately.

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Lots:

• 1000 = micro
• 10,000 = mini
• 100,000 = standard

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Different sessions, volatility of currency pairs differs

Asian (Tokyo):

• low liquidity
• more active in early part of session due to news announcements, China news important..
• Other than JPN crosses, more active in Asian Pacific crosses AUD/USD, NZD/USD than others
• Can set the tone for following sessions
• If NY session has big moves, expect consolidation in Tokoyo session

European (London)

• Active so high liquidity & low spreads
• Most trends start in this session & typically carry until start of NY session
• Trends can reverse near end of session as Euro traders lock in profits
• Volatility drops off in middle of session as people go for lunch prior to NY session opening

NY session

• High liquidity in AM as overlaps Euro session
• Most econ reports released at start of this session so can impact US$
• Volatility & Liquidity drops off once Euro session overlap ends
• Quiet on Fri PM as Asian traders leave work
• Poss reversals Fri as US traders close positions to minimise exposure to bad news over weekend

Summary best time of day to trade?

Toyko-London overlap:

• Not so busy as later half of Asian session quiet anyway, so European traders not expecting action at start of London session

London – NY

• The busiest period, impacted by US/Candana news, and late European news
• Euro traders consoldiating at close of London session = irratic US midday

Days of week to Trade:

 

EBS plaform, EUR/USD, USD/JPY, EUR/JPY, EUR/CHF, and USD/CHF are more liquid. Meanwhile, for the Reuters platform, GBP/USD, EUR/GBP, USD/CAD, AUD/USD, and NZD/USD are more liquid.

 

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Major Currencies

Symbol	Country	Currency	Nickname
USD	United States	Dollar	Buck
EUR	Euro zone members	Euro	Fiber
JPY	Japan	Yen	Yen
GBP	Great Britain	Pound	Cable
CHF	Switzerland	Franc	Swissy
CAD	Canada	Dollar	Loonie
AUD	Australia	Dollar	Aussie
NZD	New Zealand	Dollar	Kiwi

Major Currency Pairs

The currency pairs listed below are considered the “majors”. These pairs all contain the U.S. dollar (USD) on one side and are the most frequently traded. The majors are the most liquid and widely traded currency pairs in the world.

Currency Pair	Countries	FX Geek Speak
EUR/USD	Euro zone / United States	“euro dollar”
USD/JPY	United States / Japan	“dollar yen”
GBP/USD	United Kingdom / United States	“pound dollar”
USD/CHF	United States/ Switzerland	“dollar swissy”
USD/CAD	United States / Canada	“dollar loonie”
AUD/USD	Australia / United States	“aussie dollar”
NZD/USD	New Zealand / United States	“kiwi dollar”

Major Cross-Currency Pairs or Minor Currency Pairs

Currency pairs that don’t contain the U.S. dollar (USD) are known as cross-currency pairs or simply as the “crosses.” Major crosses are also known as “minors.” The most actively traded crosses are derived from the three major non-USD currencies: EUR, JPY, and GBP.

Euro Crosses

Currency Pair	Countries	FX Geek Speak
EUR/CHF	Euro zone / Switzerland	“euro swissy”
EUR/GBP	Euro zone / United Kingdom	“euro pound”
EUR/CAD	Euro zone / Canada	“euro loonie”
EUR/AUD	Euro zone / Australia	“euro aussie”
EUR/NZD	Euro zone / New Zealand	“euro kiwi”

Yen Crosses

Currency Pair	Countries	FX Geek Speak
EUR/JPY	Euro zone / Japan	“euro yen” or “yuppy”
GBP/JPY	United Kingdom / Japan	“pound yen” or “guppy”
CHF/JPY	Switzerland / Japan	“swissy yen”
CAD/JPY	Canada / Japan	“loonie yen”
AUD/JPY	Australia / Japan	“aussie yen”
NZD/JPY	New Zealand / Japan	“kiwi yen”

Pound Crosses

Pair	Countries	FX Geek Speak
GBP/CHF	United Kingdom / Switzerland	“pound swissy”
GBP/AUD	United Kingdom / Australia	“pound aussie”
GBP/CAD	United Kingdom / Canada	“pound loonie”
GBP/NZD	United Kingdom / New Zealand	“pound kiwi”

Other Crosses

Pair	Countries	FX Geek Speak
AUD/CHF	Australia / Switzerland	“aussie swissy”
AUD/CAD	Australia / Canada	“aussie loonie”
AUD/NZD	Australia / New Zealand	“aussie kiwi”
CAD/CHF	Canada / Switzerland	“loonie swissy”
NZD/CHF	New Zealand / Switzerland	“kiwi swissy”
NZD/CAD	New Zealand / Canada	“kiwi loonie”

Sydney session, the Tokyo session, the London session, New York session

Summer (approx. April – October)

Time Zone	EDT	GMT
Sydney Open Sydney Close	6:00 PM 3:00 AM	10:00 PM 7:00 AM
Tokyo Open Tokyo Close	7:00 PM 4:00 AM	11:00 PM 8:00 AM
London Open London Close	3:00 AM 12:00 PM	7:00 AM 4:00 PM
New York Open New York Close	8:00 AM 5:00 PM	12:00 PM 9:00 PM

 

Winter (approx. October – April)

Time Zone	EST	GMT
Sydney Open Sydney Close	4:00 PM 1:00 AM	9:00 PM 6:00 AM
Tokyo Open Tokyo Close	6:00 PM 3:00 AM	11:00 PM 8:00 AM
London Open London Close	3:00 AM 12:00 PM	8:00 AM 5:00 PM
New York Open New York Close	8:00 AM 5:00 PM	1:00 PM 10:00 PM

Average pip movement of the major currency pairs during each forex trading session.

Pair	Tokyo	London	New York
EUR/USD	76	114	92
GBP/USD	92	127	99
USD/JPY	51	66	59
AUD/USD	77	83	81
NZD/USD	62	72	70
USD/CAD	57	96	96
USD/CHF	67	102	83
EUR/JPY	102	129	107
GBP/JPY	118	151	132
AUD/JPY	98	107	103
EUR/GBP	78	61	47
EUR/CHF	79	109	84

Below is a table of the Asian session pip ranges of the major currency pairs.

Pair	Tokyo
EUR/USD	56
GBP/USD	54
USD/JPY	30
AUD/USD	65
NZD/USD	58
USD/CAD	39
USD/CHF	40
EUR/JPY	57
GBP/JPY	72
AUD/JPY	65
EUR/GBP	23
EUR/CHF	–

These pip values were calculated using averages of past data from the month of May 2012. Take note that these are NOT ABSOLUTE VALUES and can vary depending on liquidity and other market conditions. Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Below is a table of the London session pip ranges of the major currency pairs.

Pair	London
EUR/USD	83
GBP/USD	82
USD/JPY	36
AUD/USD	60
NZD/USD	64
USD/CAD	66
USD/CHF	58
EUR/JPY	80
GBP/JPY	102
AUD/JPY	86
EUR/GBP	40
EUR/CHF	–

These pip values were calculated using averages of past data from the month of May 2012. Take note that these are NOT ABSOLUTE VALUES and can vary depending on liquidity and other market conditions. Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some neat facts about European session:

• Because the London session crosses with the two other major trading sessions–and with London being such a key financial center–a large chunk of forex transactions take place during this time. This leads to high liquidity and potentially lower transaction costs, i.e., lower pip spreads.
• Due to the large amount of transactions that take place, the London trading session is normally the most volatile session.
• Most trends begin during the London session, and they typically will continue until the beginning of the New York session.
• Volatility tends to die down in the middle of the session, as traders often go off to eat lunch before waiting for the New York trading period to begin.
• Trends can sometimes reverse at the end of the London session, as European traders may decide to lock in profits.

Below is a table of the New York session pip ranges of the major currency pairs.

Pair	New York
EUR/USD	77
GBP/USD	68
USD/JPY	34
AUD/USD	68
NZD/USD	62
USD/CAD	67
USD/CHF	56
EUR/JPY	72
GBP/JPY	77
AUD/JPY	71
EUR/GBP	36
EUR/CHF	–

These pip values were calculated using averages of past data from the month of May 2012. Take note that these are NOT ABSOLUTE VALUES and can vary depending on liquidity and other market conditions. Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some tips you should know about trading during the New York session:

• There is high liquidity during the morning, as it overlaps with the European session.
• Most economic reports are released near the start of the New York session. Remember, about 85% of all trades involve the dollar, so whenever big time U.S. economic data is released, it has the potential to move the markets.
• Once European markets close shop, liquidity and volatility tends to die down during the afternoon U.S. session.
• There is very little movement Friday afternoon, as Asian traders are out singing in karaoke bars while European traders head off to the pub to watch the soccer match.
• Also on Fridays, there is the chance of reversals in the second half of the session, as U.S. traders close their positions ahead of the weekend, in order to limit exposure to any weekend news.

Best Days of the Week to Trade Forex