“Forex” is referred to Foreign Exchange, it is the largest financial market in the world. Its transaction volume is over $4 trillion a day which is actually more than three times of the total amount of the stocks and futures markets combined. It is a really huge market.

Forex trading involved buying of one currency and selling of another at the same time. Currencies are traded in pairs eg. EUR/USD, USD/JPY or EUR/JPY.

Most traded currencies are USD, EUR, JPY, GBP, CHF, CAD, AUD and NZD.

Forex market is open 24hours a day and close during weekend. For Singapore time, it is open on Monday morning and close on Saturday morning. So anyone can trade at anytime within the weekdays.

For Forex, the increment of currencies is called “Pip”. If the currency, for eg. USD/JPY, moves from 98.92 to 98.93, the increment is one pip. In forex, the profit or loss is measured by “pip”.

There is no commissions for trading in Forex, there is no clearing fees, no brokerage fees. Brokers earn through the spread, it is the difference between the bid and ask price. Usually major pairs like EUR/USD has the spread of 2 pips, it various between brokers.

Forex is traded in lots, the standard size for a lot is $100,000 and for mini size, a lot is $10,000.
For a $100,000 lot size, the value of pip is calculated as follow:

USD/JPY at an exchange rate of 93.92
(0.01/93.92) x $100,000 = $10.64 per pip

EUR/USD at an exchange rate of 1.2575
(0.0001/1.2575) x EUR100,000 = EUR7.95, where EUR7.95 x 1.2575 = $10 per pip

$100,000 is not a small amount, how can most retailers afford to trade in Forex?
Don’t worry, for Forex Trading, the brokers usually provide a leverage of 50:1, 100:1 or 200:1. Meaning with a leverage of 100:1, retailers are able to buy a standard lot of $100,000 with $1,000. Not forgeting the mini lot, for some brokers, it only required a minimum deposit of $250 to open a mini account.

In Forex trading, there is another good thing is that all brokers provide basic order types such as:
Market Order, Limit Order, Stop loss order, Good Till Cancelled (GTC), Good For the Day (GFD) and Order Cancels Other (OCO).

Meaning with these orders, we are able to set our profit taking or stop loss level when entering a trade, or even before entering a trade, we are able to set our entry, profit taking and stop loss level.

Sounds good right?

This is the beauty of Forex Trading.

 (Note: All $ stated are in USD)

FX / Forex Market - Best Trading Hours

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. 

Happy Trading

Rooney