General Investment & Forex Tips

Forex trading is an art. If I am an educator, I would make sure that there is a module on Forex trading in every university course. It teaches one important lessons in life - money management, controlling your emotions, patience, fear, analytical skills, current affairs. I have never been so aware of the world when I was just doing a job.

Below is my view how one should allocate his resource in building up his wealth for retirement. Forex being both a passive and active option for wealth accumulation.



Learnings and observations

• There are four key markets and each have varied activities. In order of highest activities - US 41% (from 9pm to 3am), UK 16% (from 4pm to 12am), Tokyo (from 9am to 4pm), Australia (from 6am to 2pm). 

• The first 30 minutes of each market open represents the trade direction and that direction usually reverse 30-45 mins before their market closes. As forex is a derivative, they can start with either buy (long) or sell (short) positions but will always clear their positions before the end of the day. Any trade carried forward incurs a swap fee and additional risks.

• There are two quiet periods - 10am-3pm and 5pm-8pm where volatility and price movement are low.

• For intraday trades (scalping), the ideal time to trade is from 3pm to 12am. Always clear your trades or set stop loss before logging off.

• For swing traders (those who has a day job and trades on daily charts), the ideal time to trade is between 9pm and 12pm.

Events

• Before high impact events listed on the Economic Calendar, the trade usually goes quiet as well. Avoid the first 5-10 minutes after the results is announced as there will be high volatility. The audience interpreted the news differently and there could be huge swing up and down; that can be very misleading. It can also create slag - meaning that the prices are jumping so fast that you are not seeing the actual price when you trade.

• Stay up if you need to; especially during wage data, labour data and Fed announcements.