What does "normal market hours" mean?

[Mainframes]

Hi,

I was wandering what people meant when they said that they trade under normal market hours.

I've got a strategy and I want to use it most of the time....BUT I do not want to trade when:

a) The market is too slow, so my trades take a long time to be put through.
b) When the market is too volatile, so the by the time my order is put through, the price has changed (slippage).
c) During news release time (which causes all sorts of problems)

With these conditions in mind, then can you tell me when not to trade. And if this depends on which currencies I am trading, then can you tell me when not to trade which currency pairs?

Thanks

[kassai]

In forex there is no "normal" market time. It’s a 24 hour market, however when people talk about market time they usually mean 9 to 17 local time.

If you live in UK The European market will open an hour earlier at 8 GMT (which would be 9 in Frankfurt).
The Asian market hours will be from England00:00 GMT to 08:00 GMT (9-17 >Tokyo).
European, from 8:00 or 9:00 until 17:00 (Frankfurtlace or lac London)
The American market is 14:00 GMT to 22:00 GMT (NY)
Most traders will agree that during "market hours" the price movements will be stronger coz there will be much more trading going on. The European and American hours lap during 14-17 GMT so you can look at that as well.
Another thing you might want to consider are the pairs you trade during different market hours – for example the Yen volume will be higher during Asian ours than out of those hours. The GBP will swap more hands during London hours than out of London hours etc
The news reports can be trouble for some and a feast for others. I really don’t think any one can advice you if to trade during news releases or not. It depends on the strategy your using and mainly if it works or not.
The only advice I can give you is to find a news calendar going back in time (google "news calendar") and check to see what would happen if you went by your trading rules during news releases, if you traded only during this or that market times.
Hope that helps and good luck with your trading!

[Optional]

This website has a handy table showing what markets are open and closed in real time.

http://www.forexhours.com/

[KPcurrency]

Very nice kassai. I would add one thing. A lot of activity happens when the U.S. stock market is open for regular hours. More exactly, when the S&P both open out cry and the electronic mini are open. The mini trades 24 hours a day, but volume is low as most U.S. emini traders trade only during the Day session. Again, this falls in to the 9 est am to 5 est pm timeframe Kassai spoke of. So sometimes when people refer to normal market hours, they are refering to normal (equity/equity futures) hours. Plus, most banks are open during the above time.

[kassai]

KPcurrency,

I think Mainframes was referring specifically to forex trading ("…can you tell me when not to trade which currency pairs?").
The reasons for currency price movements are so complicated and related to endless causes and events… Even though there probably is some kind of relation between the S&P and forex I don't quite understand why you chose to mention the S&P open?
When speaking about forex I think the main issue is the volume going on during the stock market hours (because of the reasons you mentioned – big institutes and banks are active at those times and that’s when the money moves).
Any way, I never thought or looked into the relation between stocks and forex (I exclusively trade forex) and you have an interesting point there.
Have you found any correlation between the S&P (or any other index for that matter) and forex?

Thanks for your input

kassai

[KPcurrency]

Kassai:

There may be or not be a relationship between the S&P and the currency market. I really don't know. My point was that when the "big boys" are on the NYSE or in the S&P pit in Chicago, their currency trading counterparts tend to be at the screen as well. Remember, if a U.S. company wants to invest in a French firm, there is not only a stock transaction but also a currency transaction. So the equities traders also look to the currency traders. Before a Japanese mutual fund buys Microsoft, there must be a currency trade made. So, it just seems to me that, the hours when the stock market (U.S.) is open correspond to good volume/trading in the currency market.

When I look at my charts, It just seems that the best move start around 7am to 9am est time and the time to get out is around 5 pm est. (The best moves in terms of volume, absolute percentage change, and trediness). Again, this in not unlike what you said. I just mentioned the fact that these hours coinside with other important U.S. markets.

[kassai]

I couldn't agree more.

Cheers

[Gamma_Jammer]

Originally Posted by KPcurrency

Kassai:

Remember, if a U.S. company wants to invest in a French firm, there is not only a stock transaction but also a currency transaction. So the equities traders also look to the currency traders. Before a Japanese mutual fund buys Microsoft, there must be a currency trade made. So, it just seems to me that, the hours when the stock market (U.S.) is open correspond to good volume/trading in the currency market.

.

Sorry, but this is not strictly accurate. Most currency trades that are executed to cover equity (or indeed fixed income) trading activity actually lag, not LEAD the equity or bond trade in question. Usually by a day. The large institutional firms (pension funds etc) trade a large proportion of their equities for T+3 settlement, and therefore can execute the fx the next day on a normal spot (i.e. T+2) basis to cover the trade.

Of course cross border investment adds its own complications due to time zone constraints, but this is broadly how it works.

GJ