The three major foreign exchange or forex markets are in Tokyo, London and New York.
Unlike stock market, the forex market opens 24 hours a day. It starts from Sunday 5pm EST (or Monday 6am Singapore time) through to Friday 4pm EST (or Saturday 5am Singapore time).
Since the forex market opens 24 hours a day, this means that we can trade it anytime of the day. However, there are certain things to take note of when trading the forex market, one is the trading hours of the day.
During certain time of the day, trading volume will be more active and this is when a breakout signals for certain pairs of currencies have a higher chance of success since they come with higher trading volume, enabling us to capture more profits or pips.
The following are the normal trading hours of the 4 main forex markets :
Sydney Forex Trading Hours
Singapore time 0600-1500 EST 1700-0200 GMT 2200-0700
Tokyo Forex Trading Hours
Singapore time 0800-1700 EST 1900-0400 GMT 0000-0900
London Forex Trading Hours
Singapore time 1600-0100 EST 0300-1200 GMT 0800-1700
New York Forex Trading Hours
Singapore time 2100-0500 EST 0800-1600 GMT 1300-2100
So when is the best trading hours for the forex market ?
The best trading hours are when the trading hours of the above forex markets overlap :
London and New York 0800 to 1200 EST
London and Tokyo 0300 to 0400 EST
Sydney and Tokyo 1900 to 0200 EST
As such, we can expect that between 0800 to 1200 EST, trading EUR/USD or GBP/USD currency pairs may yield better results based on breakout strategy when the trading volume is more active during those hours and the likelihood of a trending market is higher during those time.
How to reduce risks of being scammed before you set up a live account with new forex brokers?
Forex Trading Newbie Take Note :
Over the past few months, I have started to take a more serious interest in learning forex trading. I find that forex trading offers a whole new dimension for traders who are already well versed in trading stocks like myself.I like the fact that most serious forex traders usually focus only in 2 to 3 major pairs such USD/JPY, EUR/USD and EUR/JPY.To me its like having to focus only in monitoring 2 to 3 stocks. Plus I can tailor-make my trading time frame eg. using hourly or 5 minute charts accoding to my time.
The biggest attraction for me for forex trading is that usually the live data is provided for FREE , this is down to 5 second charts for some brokers’ trading platforms, can you believe it!!Lastly, most forex brokers offers free demo account so that you can practice using fake money as long as you wish using live data until you are confident to start using real money. I know some newbie does demo trade for one year before going live trade.
However, as I begin to learn more about the market, I realized that there are also some risks that newbie have to be very careful about.
Firstly, the foreign exchange (also know as forex or fx) market is NOT regulated like stock market or futures or commodity market. Stock brokers or securities companies in Singapore or other countries are regulated by the stock exchange whereby they have to meet very strict rules including capital requirement before they are granted license.Their brokers are also required to take exams before they can begin to trade.When there is proper regulation, it means lower risk of scams and higher safety for our cash deposits.
For forex market, it is almost completely unregulated.Currently, most so-called forex brokers are NOT regulated by any specific exchange or rules.Most of them are just private companies or even private individuals offering an electronic platform to trade currencies pairs.Only a few reputable forex brokers are backed by banks but their rates are not cheap for retail traders, they tend to service only big clients. As we know, when there is money involved and no proper regulation, it will lead to scams and frauds.
So far, two of my friends I know are having some problems withdrawing money from two separate overseas based forex brokers!They were attracted by their competitive rates which usually comes in the form of “tight spreads” or “low pips” meaning the spread between buy and sell is very narrow. But cheap does not mean good as we all know.
For newbie retail investors or traders who do not wish to pay bank backed forex brokers high rates, what can we do to lower our risk when we are looking for brokers which offers competitive rates ?
When you set up a demo account, you can set it up with any brokers since it does not involve real money. But once you plan to send your hard earned money to a new forex broker, you should do some basic homework. It took me sometime to go through the process and I wish to share here my experience :
1.Goto Google and type “xxx forex broker” forex broker review
This is the fastest way to find out if the forex broker you intend to open a new account has any bad press or comments posted in the web about them before…….thank God for search engines haha.
After you make the forex broker review search in google, you will have a long list to read through.At least take some time to visit the sites in the first page of the search.
I would like to add that some of the comments in the website either negative or positive may be posted by competitors of the brokers or by the brokers themselves.So read them with a pinch of salt.But if there are enough negative comments around, just be more careful.
2.Physical presence of office in prominent countries like Singapore, Hong Kong or USA should add to the credibility of the company but it is still not a guarantee. But at least it is better than those based in obscure countries such as BVI, Bermuda, Cyprus or some eastern European countries. There is a possible reason where they are based far away…..so that you cannot find them!!
3. Do not be fooled by special offers such as 20% FREE cash bonus for every dollar you deposit or extremely low commission offers such as zero pips or low spread. Usually, it’s cheap for a reason….to lure you to put your hard earned money and disappear.
4.Testing sum from small to big
Do not send big amount over the first time. To me more than USD1000 is big amount.
After you have put money there, try to make a few withdrawals first over a period of 2 to 3 months.If you can get your money back easily then you may consider gradually increase the cash deposit.To me I think it is even better only let your winnings grow and stay in the account and withdraw your capital out as soon as possible.So that if something bad happens, you only lose your winnings. Even so, you only need to maintain the amount of winnings needed to fund your trading size and can still withdraw the excess cash winnings.
Most scams are only discovered when traders tried to withdraw money. Because when you win and leave your money there, the Scam broker will not disturb you since the money is still with them.
5. Registration with NFA or FSA
This point is worth taking note. Although forex trading industry are not regulated, but forex brokers who choose to be based in United States and United Kingdom are required to be registered with National Futures Association (NFA) in USA and to register with Financial Services Authority (FSA) in UK.
You may visit their websites and see if the brokers you wish to trade with are register with either of them. Just type in the FX brokers’ names in the websites below :
FSA website to search if the broker is registered in UK :
In the NFA website, you can also try to find out if the registered brokers have been fined before for any previous wrongdoings.
I read in NFA website that Interbank FX were fined USD25,000 and USD100,000 before for taking inadequate deposit from customers and for using misleading marketing materials but I do not think that is a very serious offence. But it just shows that NFA website is very good and informative and you can make a better assessment of brokers who are registered with them.
If the brokers you plan to set up account are registered with either NFA or FSA, at least it is better than those that are not registered.DO NOT just believe the brokers when they say they are registered, make sure you go to the websites above to double check it yourself.
Final note, as long as FX trading market is not properly regulated, there is a chance that your deposit may be gone suddenly, so I would prefer to take back my capital as soon as possible and only leave my winnings there.
