Forex: The 24 hours a day market
In the Forex marketplace, there are several mitigating factors that can have a profound effect on the trading patterns of specific currency pairs.
Some of these include economic data and information that governmental bodies put out such as the Consumer Price Index, the Gross Domestic Product, unemployment and non-farm pa yrolls which outline how the private sector hiring is going and the manufacturing and production figures.
When one of these numbers are released, depending upon what the expectations are for them, they can have a major impact on which way a currency pair will go.
Since the FX market is a non-stop global market which provides 24 hour access to its traders, the ability is there to not just stick to one specific region and trade it. Traders have the luxury of trading at any time of the day, enabling them to seize on the precious moments before or after a major release in a far away land.
If a trader in the US is up at 2:00 AM and hears that the Japanese GDP was just released and it is down from expectations, the traders can simply go into their account and trade immediately whereas in other markets like stocks and bonds, the trader would have to wait until the market opens along with everyone else.
This is an advantage which is widely ignored by most traders. Whether it is the lack of understanding of the foreign markets or the affect that data has on them, or just a 9-5 mentality, there are many traders who choose not to take advantage of this.
As a stock trader once said to me, if I did not have to wait for the market to open I would be 1000 times more successful than I am what he meant simply was that if you could trade on news immediately, and not have to wait for the morning bell, you too can exhibit a higher level of success at your Forex trading.
Be smart and drink a lot of coffee – success waits if you can pull it off.