Chapter 4 – When Does The Forex Market Move?

Another valid question, but often ignored. The quick answer is Currency Market moves when the people of that country or countries are up and starting their day, that’s when you will see movement, liquidity, and pure price action.

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Try to trade GBP/USD around Asian Session or Late US Session. Not only you won’t see much action, but because of the lack of liquidity, market may move in ranges, not enough to give you a decent profit, nor enough to stop you out.

One of the most important factors that I have discovered and enhanced my trading is to realize the importance of time. As a matter of fact, I have a theory that seemed to work very well for me, and I named it the “Lunchtime Reversal”. Simply put, every lunch time hour for each of the major markets, namely the London, Tokyo, and New York, you will see signs of market reversal, because these professional traders who have the ability to influence market, need to square their positions so that they can go out for lunch. Therefore, there are two immediate applications for it:

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1. Close your trades around lunch time knowing that the market is about to reverse its gains.
2. Stay in the trade (longer term) and know that lunchtime reversal is only temporary. Long term trend will resume in a few hours.

This simple knowledge has helped me time and time again. When I am on a longer term trade and all the sudden market reverses without a valid reason, but if it coincides with one of the lunchtimes, I would still keep my original position and ride it out knowing what was going on. On the other hand, when I see market hitting a strong resistance/support area around lunchtime, usually by looking at other confirmations such as the daily ranges, fundamental news, and market sentiment, I would enter a reversal trade. But without the time factor in the first place, I would NEVER have entered the trade, as we don’t usually know how far the market is going to go; it’s hard to predict a top or bottom, but it’s not that difficult to predict WHEN.

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About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

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