Trading the Euro Market
Trading the Forex market is a risky decision, yet a potentially profitable one if you don’t cut any corners learning and mastering the skill set it requires. As a trader, you’d want to grab every piece of information or tool that increases your edge even by the smallest amount. One such factor is timing. Which times of the day you trade can greatly affect your year-end P/L. Trading in volatile times presents you with higher potential gains from wide price movements but simultaneously increases risk.
A particular market ripe with opportunities is the Euro, which ranks second after the US dollar in terms of global liquidity. There are several tradable opportunities emerging from European countries including Greece and Ukraine. If you are interested in trading the Euro, here’s a guide to the best time for forex trading in European market.
Identify Pairs of Interest
Trading in Forex always involves two currencies. If you buy the EUR/USD, for example, you are simultaneously selling the US dollar. Certain Euro pairs, such as EUR/USD and EUR/JPY tend to have different times of activity and inactivity throughout the day. Know which Euro pairs you want to trade based on risk threshold, capital growth rate targets, and trading style. Major pairs like EUR/USD are often more stable and low-risk while exotic pairs like EUR/SEK tend to be more volatile.
Do Your Homework
It pays to do some research, especially when it comes to specific questions like “what’s the best time for forex trading in European market?” In general, major Euro pairs, such as the EUR/USD, are most active between the hours of 8:00 AM and 12:00 noon Eastern Standard Time. This is because both New York and London Exchanges overlap during these times hence more market participants are putting in orders and moving price.
Find the Sweet Spot
As every Forex trader knows all too well, the market runs 24/5, meaning there’s always something to trade day and night. This doesn’t necessarily mean you can trade the Euro pairs any time and get away with some good amount of pips. Know which times of the day you are more mentally focused and relaxed to trade. A job, family chores, and other responsibilities may restrict you from trading during certain times, so it’s best to plan ahead to avoid conflicts in your schedule.
Keep Updated on Economic News
There are tons of economic reports being released from the European continent, from industrial production to interest rate changes. Staying well-informed on upcoming economic reports and their respective forecasts and actual output can affect when the best time to trade the Euro is. Aside from European economies, it is also prudent to look at reports coming from the US and other currencies paired with Euro.
Keep in mind that there is no fixed time to best trade the Euro or any other currency for that matter. It all comes down to proactively looking for tradable opportunities in the European market using predefined trading methods and resources.