The Forex market works round the clock, 5 days a week, you knew that already. Does it mean you can do some trading and make money any time of the day as long as they fall within that 5-day scope? Yes. However, you also need to be aware of the most ideal times of trading so that you can make some really good choices and decisions about the exact currency you need to buy or trade for.
To understand the paragraph above, we have to grasp some understanding about Greenwich Mean Time. It is a system by which time zones all over the world are cohesively weaved together so the events that take place within them can be recorded accordingly and appropriately. Tourism, as well as currency exchange, rely heavily on time zone schedules so they can conduct business in the smoothest ways possible.
Why do we need to know about it? Because it will give you a better understanding of how the Exchange market really works on a global scale, as a business that never sleeps. Forex experts claim that from the perspective of the GMT time zone, the 3 major components of the market operate according to the following sessions.
Asia: 5:00 am – 4:00 pm
Europe: 3:00 pm – 12:00 am
USA: 8:00 pm – 5:00 am
By looking at that, we can grasp the idea that the Forex sub-markets within a particular group of countries are active within those given timeframes. It means that if you are quite knowledgeable with how the market within the areas listed above, you can make some smart trading within those schedules.
Does that mean you can’t trade within the other markets if you live outside a certain country or continent? You still can! What that time list simply implies is that the market of those groups of countries, which happen to be the biggest factors that play within the Forex world are most active during those respective times.
If you prefer a trading schedule in which the country where you live is not that active during a certain session, you can always trade for currencies in other countries that are active in your free time. Like what’s mentioned earlier, the Forex market doesn’t sleep technically. You can trade, buy, sell, and make profit 5 days a week, 24 hours a day, as long as you choose the right currency at almost any given time at all.
Knowing The Most Profitable Currencies
Like a good warrior who has good knowledge of his weapons and battle equipment, you who plan to be transformed into a wise Forex trader must know the basics of the most popular currencies that you can make a profit with. Currencies are named with some abbreviations. Let’s iterate them one by one.
For the US we have the Dollar which has the symbol of “USD”, also called “Buck”
For the European Union we have the Euro which has the symbol of “EUR”, also called “Fiber”
For Japan we have Yen which has the symbol of “JPY”, also called “Buck”
For the UK we have the pound which has the symbol of “GBP”, also called “Cable”
For Switzerland we have the Swiss Franc which has the symbol of “CHF”, also called “Buck”
For Canada we have the Canadian Dollar which has the symbol of “CAD”, also called “Loonie”
For Australia we have the Australian Dollar which has the symbol of “AUD”, also called “Aussie”
For New Zealand, we have the New Zealand Dollar which has the symbol of “NZD”, also called “Kiwi”
They are not the only currencies out there. However, most successful traders focus on these 8 major currencies because they are the most traded forms of money in the world. Looking at the given list would also give us the understanding that in connection to the “economy knowledge” stated above, there are also 8 countries that you need to really watch out for.
Such countries are the major key players within the Forex market so by default, being knowledgeable about all of them will surely give you the greatest advantage as a Forex trader.
Understanding Symbols Pairings
Let’s understand what currency pairing actually means, and why they are paired in these ways:
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
AUD/USD
NZD/USD
You might wonder why in the list above, the US Dollar appears in all items. It’s because it has the most number of transactions going on in the world at all times. While the US might not be the ultimate richest country in the world, its currency has become the favorite single side of any Forex trading that ever exists.
When doing your actual trading acts, bear in mind that the position of USD is fixed and locked which means you can’t really change it – Online platforms program their systems that way, for easier comprehension. If it appears on the left or on the right said of a certain pairing, you have to leave it as it is. Such a method makes the acts of trading much more simple for everyone especially for novice traders like you.
Exotic Pairs
When physical looks are focused on as a topic there is this thing called “exoticism.” And although we’re not talking about any outward beauty in Forex, we have to know that there is another kind of beauty going on within the market, and it is an exotic currency pairing at its finest.
Why exotic? Because they don’t really belong to the “8 big leagues” in the Forex trading business. They are those that come from “not-so-popular-countries” in terms of currency power. Here they are with their corresponding symbols:
Currencies Symbols
Euro – Turkish Lira : EUR/TRY
US Dollar – Swedish Krona : USD/SEK
US Dollar – Norwegian Krone : USD/NOK
US Dollar – Danish Krone : USD/DKK
US Dollar – South African Rand : USD/ZAR
US Dollar – Hong Kong Dollar : USD/HKD
US Dollar – Singapore Dollar : USD/SGD
They are the most popular currency pairings within the “Exotic Category”
About Forex Quotes
To understand Forex pairs further, let’s break down each part meticulously. Reading Forex quotes is one of the most fundamental things that an aspiring trader must learn, you have to know it this early. For this example, let’s take a look at USD and Euro. As of this writing, the pairing of the 2 would give us a value of “1.1500” so it would give us this Forex Quote:
EUR/USD = 1.1500
That line simply means that if you invest in that pair, you’d get the amount stated by their equivalent numbers. So if you exchange your European money for American money, you’d have a total of 1 Dollar and 15 cents. The 2 components of that quote are actually labeled as “base currency” and “quote currency” – the one on the left side (EUR) is the base, while the one on the right (USD) is the quote.
To make it easier for traders to remember the respective values for each currency pair, the base currency is always assigned with the value of 1. As what’s discussed earlier about trading as the act of buying and selling at the same time, we can say that a currency quote is what reminds you of the amount you’re dealing with.
So in the EUR/USD pair, you are actually selling Euro money while buying US Dollars at the same time. If you have it this way, USD/EUR, then you’re actually selling USD money while buying Euro. Just bear in mind that the base currency, the one on the left, is what you’ll be selling.
To make it simpler, we can write the formula this way:
EUR/USD : buy Euro, sell US Dollar
USD/EUR : buy US Dollar, sell Euro
The same applies to all currencies in existence. All you need to really understand and take note of is the symbol for each currency.
There will be more Forex discussion in my next posts. Until then, Excelsior!
now is the right time to sell us dollars in Indonesia because the price is higher and higher