Asia Overlap: Gamer Handsome Profits ? Day Trading the Currency ...

June 1st | Day Trading the Currency Market

2 a.m. ? 4 a.m. 32 29 43 24 43 20 28 20 16 60 62 26 Figure 5.1 Asian session session: 8 hours-5 hours volatility U.S. EST New York the second largest FX market, includes 19 percent of the total volume turnover according to the 2004 triennial Central Bank FX market survey of foreign exchange and derivatives market activity in April 2004, published by the Bank for international settlements. It is also the financial centre which guards the backdoor of the world?s FX market as trading activity usually winds down to a minimum of her afternoon session until the opening of the Tokyo market, the next day. The majority of the transactions are executed during the session U.S. 51 between 8 a.m. and noon, a period with high liquidity because European traders still in the market. For risk tolerant traders are GBP/JPY, USD/CHF, GBP/USD and GBP/CHF good choices for day traders since the daily average around 120 pips varies. Trading activities in these currency pairs are particularly active because these transactions relate directly to the US dollar. When the U.S. stock and bond markets are open, have foreign investor during the session to their domestic U.S. currency, such as the Japanese yen, the euro and the Swiss franc, converting dollar-dominated assets in their transactions. GBP/JPY and GBP/CHF have with the overlap of the market, the broadest daily reach. Figure 5.2 U.S. session most currencies in the FX market volatility which are quoted with the dollar as the base and mainly traded against it before translating in other currencies. In the case of GBP/JPY, for a British pound being converted into Japanese yen, it has to be traded against the dollar first, then in yen. Therefore, a GBP/JPY trade includes two different currency transactions, the GBP/USD and USD/JPY, is ultimately determined by the volatility and correlations of the two derivative currency pairs. Since the GBP/USD and USD/JPY have negative correlations, meaning that their direction of movements are opposite to each other, so is the volatility of the GBP/JPY strengthened. USD/CHF traffic can also be explained in the same way, but has a greater intensity. Very lucrative trade in currency pairs with high volatility can be, but it is also important to also note that the risk is very high. Traders need to their strategies in response to market conditions constantly revised because abrupt movements in exchange rates can easily stop orders from their trade or their long-term strategies.

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Tags: Asia:, Gamer, Handsome, Overlap:, profits

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