Published on November 14th, 2019 | by Bibhuranjan

What is the best time frame to trade forex?

With the trade war high on both sides of the world, investors are torn in between whether to risk investment in stocks at the moment or to wait until the mess sorts itself out. It only makes sense when you see it from their perspective as nobody wants to drown in a pool of loss, especially in times like these. What’s more, newer investors are more susceptible to be caught up in this mess as trading experience does count when it comes to investments in risky economic situations. Which makes stock brokers like alpari.org a very promising intermediary for trading.

State of the current Forex Market

In short, it depends on the type of investor. While opportunities are never an issue, market unpredictability could be a decider. The ongoing trade-war between the economic giants US-China has shown a global economic slowdown, where previously strong or growing economies have felt the after-affects of this trade war, which is reflected in their currencies and an overall economic slowdown for the entire world.

However, in a report from the Wall Street Journal, there is actually a trend of rising profit despite the trade war. Surprising? Well don’t be. In a bid to facilitate the market during this trade war, the Federal Reserve has eased up on the taxation, leading to more breather in the strained economies.

That brings us on to the question, is the time opportune for a good investment return? Probably. Although you need to know your markets and have a decent understanding of current stock trends.

How is the Forex market Dealing with the current Times?

While the corporate culture has largely managed to stay out of this ongoing economic war, this may not be the case anymore. The earnings for this quarter has seen a significant dip for many nations, including the states, which is largely attributed lower than average stock performance, especially for companies what are involved in international trade and manufacturing.

The S&P 500 also saw temporary stock dips since late august, despite quickly recovering later this month. Overall most sectors are showing mixed results when it comes to earnings. Which kind of shows the fragility of manufacturing based economy given the current scenario.

The most affected markets though remain in the Asian continent, with China’s stocks seeing a sharp dip because of the increased import tariffs by the US. In response, China devaluated their currency by buying up U.S dollars, resulting in the Chinese Yuan’s lowest ever rate against the dollar in a long while. This was done to facilitate easier trading of the Chinese Yuan in the international market.

China, unlike the US, is heavily dependent on manufacturing, rather than services for a majority of their trade. Same goes for Germany and the U.K where purchase of commodities saw a sharp decline, post Trade war. As a matter of fact, Britain’s FTSE dropped nearly 3% and Germany’s Dax fell nearly 2.8%, which was the worst decline so far this year.

Speaking of the Pound Sterling, BREXIT has led the currency to shake a bit from its rather steady streak. Sources indicate that while the Pound is mostly safe from the trade war, it might perform better or worse going forward after the proceedings for BREXIT comes to a conclusion.

While both fronts are yet to come to an understanding on the tariff war, but it has proven to be rather futile so far. So if anything, the world might need to endure the heat of this economic slowdown for a while.

Which are the best currencies to trade at the moment?

This might be a tricky one to answer. Almost every major world currency has seen a dip in overall performance in recent times. Here are what many experts around the world predict the safest currencies are for long term investment:

USD: The U.S knows how to facilitate a level playing ground and remain competent despite any ongoing crisis. The USD is and remains one of the most valuable and well performing currencies in these times and any investment in this currency is a safe investment rest assured. Furthermore, depending on the outcome of the trade war, its value might strengthen or remain stable. Furthermore, the USD has one of the lowest spread for trade scalpers. Thus, making it a very tempting proposition for regular traders.
U.K Pound Sterling: Widely regarded as the most valuable currency in the world by many. The venerable British Pound remains on the of the most stable currencies and holds a special place among investors. Although the sterling has been performing below average because of BREXIT and market disruptions, it is soon expected to recover after a conclusion is reached. Even now it makes a very stable currency for long term Forex Trading.
Japanese Yen: This is another very stable currency for frequent trading as it enjoys a very low spread and stable growth patterns. The Japanese Yen enjoys decent exchange parity with the USD, making it an easy currency to trade with. This is also the third most traded Forex currency, falling shortly after the USD and the Euro in sheer trade volume.
Euro: Despite the trade war, euro is still holds higher value as compared to the USD and subsequently other currencies as well, save a few. The USD-EUR is one of the most favorite pairs to invest in if you are into long term gains. The Euro however is one of the unfortunate casualty of the US-China trade war and saw some noticeable disruption not that long ago. However for seasonal investors the USD-EUR is still offers some of the highest gains and it is expected to remain as such in the foreseeable future.
Indian Rupee: While the whole Indian economy itself is going through a transition phase at the moment, the Rupee however has managed to remain one of the most stable currencies to deal with in recent times. The stable INR-USD trading parity makes for a very decent forex investment for daily trading.
Australian Dollar: The AUD is widely regarded as a very stable currency, be it for long timer trading or daily trading. It has some of the lowest spread when it comes to gains/loses, making it very ideal for a safe investment with moderate-high gains.
Chinese Yuan: The Chinese Yuan is a decent currency to deal in, as over 100 countries officially trade in this currency. However, despite the stable nature of the Yuan, it isn’t as easy to deal with as come of the other currencies on this list. This is mostly because of internal Chinese policies coming into play. Recently this currency was also devaluated to pit it as an easier option to deal in against the USD, making it fall to its lowest ever value in a long while. Despite this, Yuan is a very popular currency in a lot of markets and considering that China and the US can come to some form of agreement, this might present to be a worthwhile investment opportunity.

Exotic Currencies: Is it safe to deal with them?

In this instance an exotic currency is something that holds high value against the USD but are far rarer to get a hold of and aren’t as common on the Forex Market. Depending on your exchange, you might or might not be able to deal in these currencies as these aren’t as popular a choice when it comes to large scale trading and quick liquidity is somewhat troublesome. So how are these currencies when it comes to trading?

Well the caveat with these currencies is that not a lot of exchanges or markets accept them as legal tenders for transactions. As a result these are not as popular for daily or seasonal trading but long term investments can potentially pay off.

Currently the Swiss Franc is trading equal blows with the dollar, since both have almost the same values. However the Swiss Franc has has a norm for being incredibly stable, even amidst the trade war and is blessed by low inflation and spread, making it an optimal choice for for long term trading. This currency isn’t as rare to deal with as some others on this list but your mileage may vary.

The same cannot be said for a lot of middle eastern currencies that hold extraordinary high values like the Barhaini Dinar or the Qatari Riyal. Despite the high values, they aren’t traded as commonly. Some of the worst currencies that you can currently trade all comes from the African Continent or Parts of the conflict engulfed regions of the Middle east.

In conclusion, exotic currencies aren’t totally bad to deal with if you are willing to risk a little and don’t mind long term investments. Medium risk, tradable tender like the Swiss Franc are good options for dealing in exotic currencies. A few middle eastern currencies like the Egyptian Pound, Saudi Riyal are good options too when it comes to medium risk trading.

Best Time to Deal With Forex Markets

Regardless of whether you are a daily trader or a seasonal trader, it is vitally important to know the opening times for the major Forex exchanges worldwide and have viable Forex market strategies in place. Most exchanges open and stop at non-standard times. So depending on where you are, you might be trading during the day or during the night. Also important is to consider to consider is market activity, since many seasonal traders would rather deal at times when market activity is high, to maximize profits then trade daily. This method ensures a good return on a short duration but isn’t as profitable as day trading. Therefore a thorough watch on market trends is an acceptable trait as trends can be predicted in advance.

Here are the most active and the biggest foreign exchanges are located.

London Stock Exchange: The U.K currently dominates the Forex Markets in the world, period. By volume alone, this small Island nation has the highest amount of Forex trading done on a daily basis. The U.K stock markets usually opens at around 3AM and Trading commences till Noon (Standard Time UK). Because of this reason this is one of the most favorable places for trading by yourself or via a Trade Broker. The rampant activity with UK exchange means that day trading can potentially yield very positive returns and is better suited to Scalping methods to improve profitability.

Tokyo: Tokyo tops the Asian trade markets when it comes to overall trade volume and is the biggest Forex exchange market in the Asian Continent. It opens from 7PM to 4AM. Tokyo falls in trade volume, just below Singapore and Hong Kong. The chief currency pairs traded are USD/JPY, GBP/CHF, and GBP/JPY.

Sydney: In a manner of speaking, this place sees the first trade of the day. The forex market is relatively small when compared to Tokyo or UK, but being the first market that’s open, it sees some really good initial trading. This makes an ideal place for trading after the weekends. Sydney opens its doors to trading during 5 PM to 2AM.

US: The good old wall street. The U.S forex market is the second largest, coming second to U.K. But despite this, this is perhaps the most watched market as many forex traders heavily invest in and watch the USD. Being involved in 90% of the trade commencing world wide, and having a great track record for stable returns for both short and long terms, the USD is the choice of trade currency for many traders. The markets open at around 8AM and closes at 5PM.

Conclusion

Knowing your trading hours is the first viable step to gaining success on the Forex market. Watching market overlaps can be really beneficial as you can grab profitable opportunities in your normal day trading sessions. Also whether you are a scalper, day trader or a long time trader, you’ll need to judge when to make the investment and when to withdraw. If you are new to Forex trading, seeking out a trade broker can go a long way into making your investment profitable.

Tags: alpari, currency, exchange, forex, market, money, scalper, trading

About the Author

Bibhuranjan Editorial Officer, technofaq.org I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.