Forex Bid and Ask Prices

All Forex currency are quoted in pairs such as EUR/USD and include both a bid and ask price. The bid price is always lower than the ask price.

The first listed currency in the pair or the one to the left of the slash is called the base currency and the second currency or the one to the right of the slash is called the quote currency. In our example above the EUR is the base currency and the USD is the quote currency.

The bid price for each currency pair is the price which the dealer is willing to buy the base currency in exchange for the quote currency. This means the bid is the price which you will receive when you sell the currency pair. The ask price for each currency pair is the price which the dealer will sell the base currency in exchange for the quote currency. This means the ask price is the price you will pay when you buy the currency.

The difference between the bid and ask price is commonly referred to as the spread.

A Forex trading technique known as fundamental analysis is used to help you determine whether you should buy or sell a specific currency pair. Using the EUR/USD example above, if you belief that the US economy is weaken which causes the dollar to go down in value, you would want to place a Buy EUR/USD order with your Forex broker. By placing this trade, you belief the euro will rise in comparison to the US dollar. If you belief the US economy is strong and the euro will weaken, then you would want to place a Sell EUR/USD order. This means that you anticipate the euro going down in comparison to the US dollar.

Currency Trading Hours

One of the benefits of currency trading is that the market is open 24 hours a day. This allows individuals who want to trade in currencies to trade during normal business hours, after work or even in the middle of the night. During currency trading hours there are times when the prices are consistently volatile and periods when it is muted. Also, different currency pairs exhibit varying activity over certain times of the trading day due to the general demographic of those market traders who are on line at the time.

Currency trading hours are considered a 24 hour market which offers an advantage for many individual traders because it guarantees liquidity and the opportunity to trade at any time during the day or night, it also has its drawbacks. A trader can only monitor a position for so long. There will be times when an opportunity is missed or even worse, when a jump in volatility will lead the market to move against an established trade when the trader isn't around. To minimize this risk, a trader need to know when the currency market is typically volatile and decide what times are best for their trading strategy and style.

Currency trading hours is separated into three sessions during which market activity peaks: the Asian, European and North American sessions. These three sessions are also referred to as the Tokyo, London and New York sessions. These three cities represent the major financial centers for each of the regions. The currency markets are most active when these three sessions are conducting business.

The Asian (Tokyo) market is live from midnight to 6:00 a.m. Greenwich Mean Time (GMT). China, Australia, New Zealand and Russia are also present in the currency market during this time. Because of the range of these different markets, the beginning and the end of the Asian session are stretched beyond the standard Tokyo hours. Allowing for all these different currency markets, Asian hours are often considered to run between 11:00 p.m. and 8:00 a.m. GMT.

Just before the Asian currency trading hours come to a close, the European (London) session opens to keep the currency market active. Official business hours in London run between 7:30 a.m. and 3:30 p.m. GMT. However, currency trading hours for this session are expanded because of the other capital markets including Germany and France. The European hours are typically seen as running from 7:00 a.m. to 4:00 p.m. GMT.

By the time the North American (New York) session opens, the Asian markets have already been closed for several hours. Canada, Mexico and some countries in South America also trade during the North American session. It shouldn't be a surprise that activity in New York City marks the high in volatility and participation for this session. The North American currency trading hours unofficially begin at noon GMT. With a considerable gap between the close of the North American currency markets and open of the Asian session, a lull in liquidity sets the close of New York market trading at 8:00 p.m. GMT as the North American Session close.

Forex Market Hours

A trader can't track every single movement on the Forex market because it is basically open 24 hours a day. It is important for a trader to know when they can expect high market movement. Knowing the different Forex market hours, will help traders implement the best strategy for successful trading.

Forex Market Hours

The Asian Session (7:00 p.m. - 4 a.m. EST) - You can successfully day trade the yen during this time period. The USD/JPY (U.S. dollar/Japanese yen) is a good trading pair for this session. This period is not as volatile as the U.S. session or the European session, but it is possible to trade during this session and achieve a good performance.

The European Session (2:00 a.m. - 12:00 p.m. EST) - This is one of the best trading periods in the Forex market hours. Because most of the large banks are located in London, the majority of major Forex transactions are completed during this trading session. During these Forex market hours you can implement a successful strategy trade on any currency pair.

The U.S. Session (8:00 a.m. - 5:00 p.m. EST) - This is another great session during the Forex market hours to implement a successful trading strategy. You can expect good volatility on any currency pair.

The best Forex market hours for trading are when both the European and U.S. sessions are open. Both of these sessions are open together between 8:00 a.m. and 12:00 p.m. EST. During this time period volatility is good in all currency pairs. Some of the most important economic releases appear during this period, and this will bring good opportunities for Forex traders.

Forex Market and Risk

The most important investment strategy for long term success in the Forex market is to determine how much risk you are comfortable handling. You don't want to invest an amount of money that will keep you awake at night fearing a potential loss. In any type of investment, only use capital that you can afford to lose. Your personality and lifestyle play a big role on how much risk you are comfortable with.

The Forex market is considered a high risk investment vehicle because of the volume of daily price movements and the leverage that is available in the Forex market. Investments with greater risk must promise higher expected yields to warrant taking on the additional risk. Of course, the higher risk not only means higher returns, it also means higher potential losses. However a high potential for return doesn't always mean there is a high degree of risk. Learn and use proper money management skills to minimize your risk in the Forex market.

Before investing in the Forex market, research and choose your Forex broker carefully. This research will minimize the risk of becoming involved with a broker that will be unable to pay a withdrawal request. This has happened in the past where the broker has filed for bankruptcy protection and their clients were unable to withdraw profits and initial capital until the bankruptcy was settled. Remember, choosing a stable broker is more than choosing the biggest.

There is no right level of risk for everybody. Each of us has a different tolerance for risk. Only you can determine what level of risk is right for you. Investing in the Forex market should be viewed as a long term strategy because than the market can work for you over the long run.

Forex Trading Forums

Forex trading forums are online discussion sites where you can ask questions and receive answers. People participating in Forex trading forums can build bonds with each other and typically groups will form around a specific topic discussion.

Most forums are going to require you to register in order to post to other members of the board. However some Forex trading forums will allow you to have access to their forums as a guest. You can view the forum posts but will not be allowed to actually post any responses or questions until you have registered. Usually registration involves verification of your age and agreement of the terms of service that the Forex trading forum has established. Most forums will specialize in a particular subject, such as Forex trading, dog training, home improvement tips. It is not appropriate to post a home improvement tip in a Forex trading forum. After you have registered for a forum, look for the FAQ section which will contain basic information for it's new members and individuals not yet familiar with the use and principles of a forum.

Once you are a member of a Forex trading forum, it is never appropriate to spam, post derogatory or otherwise inflammatory messages. Such behavior will typically get you banned from the forum. Double or multiple posting is also frowned upon. This is when the user posts the same or nearly the same post to multiple areas of the forum, which artificially inflates a user's post count.

One major difference between Forex trading forums and Forex electronic mailing lists is that mailing lists are set up to automatically deliver new messages to their subscribers while forums require the member to visit the website and check for new posts. Most Forex trading forums today will allow members to set up an email notification feature that will alert members when new posts in a thread have been posted.

Most online Forex brokers provide their members with an area that provides either a forum or a support center where members can view previously asked questions and answers.

Forex Trading Hours

The Forex or foreign exchange market is known for being open 5 days a week, 24 hours a day. The reality of trading on the Forex market is that it is open five and half days a week and as long as the market is open you have the ability to place a trade. The Forex market is a network of computers and large banking institutions. Trading for the week begins at Sunday 5:00 p.m. Eastern Standard Time (EST) and runs through Friday 4:00 p.m. EST. You need to remember that you are trading worldwide and not just in the United States. Forex trading hours begin in New Zealand, followed by Australia, Asia, the Middle East, Europe, and then the United States.

Here is a breakdown of the open Forex trading hours:

New York Market times: 8:00 a.m. – 5:00 p.m. EST
London Market times: 3:00 a.m. – 12:00 p.m. EST
Tokyo Market times: 7:00 p.m. – 4:00 a.m. EST
Sydney Market times: 5:00 p.m. – 2:00 a.m. EST

Transactions on the Forex market remain high during the day, but peaks highest when the Asian market (which includes Australia and New Zealand), the European market and the United State market are open simultaneously. During these Forex trading hours are when you will want to make most of your trades to receive the most profitable trades. During each trading day, the total Forex volume is determined by the number of markets that are open and the times each of these markets overlap each other.

If you are watching the Forex trading hours, you will notice that two of the major markets overlap each other during trading hours; the Asian/European market from 2:00 a.m. and 4:00 a.m. EST and the European/United States from 8:00 a.m. to 12:00 p.m EST. Typically the best time to trade is during the Forex trading hours when the markets overlap each other.

Before you sign up with a Forex broker or a Forex trading service, make sure they have an international reach and have business hours covering the different time zones.

Forex Basics

Foreign exchange or Forex investing involves buying and selling different currencies. It works on the theory that is similar with the stock market. As with the stock market to make the profit, you have to buy at a lower price and sell at a higher price, or we can also sell at a higher price first and buy at a lower price. By analyzing market conditions, you can actually make a profit in foreign exchange. All you have to do is to analyze the foreign exchange in the correct way and make the correct trade.

Why Foreign exchange investing? You have the option to invest in the stock demand, but here are a few absolute advantages of currency trading over the stock market.

24-hour Investing
Forex investing is done on 24-hours basis. The Foreign exchange market is open most of the day and night because one marketplace or the other is open, with the exception of weekends. Investors involved in foreign exchange trading strategy can get first hand information by viewing the world news or charting a country's economic well-being and than act appropriately. The currency rate is an electronic transaction involving a network of banks 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday.

Greater Liquidity
There is a superior liquidity in the market as there are always traders you might want to buy and sell foreign currencies. The foreign exchange trading market size is 50 times bigger than the New York Stock Exchange and liquidity of such a large demand ensures price stability. Foreign exchange investing makes investing more liquid and permits foreign exchange investors to take benefit of investing opportunities as they happen throughout the day rather than waiting for the open that day.

High Leverage
In foreign exchange investing a 100:1 ratio leverage is commonly available from online forex brokers, which substantially exceeds the common 2:1 margin offered by stock brokers in the stock demand. This gives Foreign exchange traders a huge control in their investing and presents the potential for extraordinary profits with relative small investments. Control can also go the opposite way and may lead to huge losses if you are not careful.

Foreign exchange trading transactions have no commissions.
Foreign exchange brokers can earn money by fixing their own speculation between what a currency could be bought at and what it could be sold at. The foreign exchange market is so large-scale that no one individual, bank, fund or government body can influence it for a long period of time.

There are certain investing signals that give indications to which way the market is moving and therefore giving the investor a heads up on which way to trade. These foreign exchange indices are delivered by email, instant messenger or direct to your desktop. Some forex brokers even offer auto-trading, allowing you to auto-execute the trading signals direct into your broker account.