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Foreign Exchange Sydney How To Time Your Trades

Foreign Exchange Sydney

In foreign exchange Sydney, the issue of timing your trades is rarely given enough consideration. This is a bit unreal because if the fundamental rule in real estate investment is “location, location, location”, then in forex, it’s “timing, timing, timing.” As a matter of fact, one could say that, in forex, no 2 hours are even the same. For instance, the hour before Sydney opens is fraught with danger. Highly illiquid conditions breed a plague of opportunistic stop loss hunters, searching high and low for fresh newbie trades. One hour after foreign exchange Sydney opens, the illiquidity is gone and the stop loss vampires have disappeared into the morning mists. Then, Tokyo opens and now a flood of new money appears on the scene.
Anyone that wishes to try their hand at day trading (after Sydney opens, please) might want to open up a 5-minute chart of their favourite currency pair and put 2 exponential moving averages (“EMAs”) on it. Then, trade in the direction of the shortest EMA at each crossover.

Why Timing Is So Essential Trading Foreign Exchange Sydney

Day traders face some interesting timing issues if they live and trade in Australia. The 2 hours after Auckland opens up can be very illiquid, with opportunistic stop loss hunters on the prowl. When Sydney opens, this situation is reversed and trading in the AUD/USD starts to bubble. One hour later, Tokyo opens and now the AUD/JPY starts to strut its stuff. Then “lunch” in Asia hits and the markets become relatively thin. Finally, someone starts moving the EUR/AUD or the EUR/JPY around because Europe is about to open up. This is also about the same time that some bank in London sneaks into the market and makes off with millions of GBP/AUD because it was looking “cheaper than usual”.

Avoiding Timing Mistakes Trading Foreign Exchange Sydney

For Sydney, the highest trading volume trading times are Wednesday mornings, followed by Tuesday and Thursday mornings. Mondays can be very problematic because many institutional traders need to attend meetings. Fridays (and all weekends) are relatively illiquid and should not be traded. This means, if you’re a day trader that you have all of about 12 “good trading hours” per week to make a profit. Impossible? No, if you trade on a highly leveraged basis. For a beginner, however, it’s too much stress. Far better to swing trade or trend-trade until you get your sea legs under you. Using a “Williams Alligator” with a 1-hour chart, plus volatility stops, should produce at least 1 significant trade every 24 hours.

How To Time Trades Correctly With Foreign Exchange Sydney

For Tuesday, Wednesday and Thursday mornings, day traders might want to use a 5-minute chart that has two exponential moving averages (“EMAs”) on it. The first one should be set for 10-periods; the second one should be inputted for 20-periods. Using a leverage ratio of at least 100:1 plus volatility stops, trade all 10-period EMA crossovers in the direction of the crossover. Newbies might want to stick to the same time periods, but use a 1-hour chart with a “Williams Alligator” on it, plus volatility stops and a leverage ratio of 50:1 or less. For extra safety, add an 8-period EMA to the chart and only trade when the EMA has also crossed over all of the “Alligator’s” lines.




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