Here’s why price and time are important in Forex trading
Investors, have you ever taken into consideration the price and time in Forex trading? Here are some helpful reminders.
When it comes to trading, there are two key elements to take into consideration: price and time. Although in Forex trading, time is slightly less important as the market runs 24 hours a day from the Asian open on Sunday evening to the New York close on Friday. This is in contrast to equity and commodity markets which have live session hours each day. However, time is still incredibly important when it comes to analyzing the market and making trading decisions.
The majority of trades are using candlestick charts which display price movement over a given time frame such as five minutes, one hour, four hours, one day, one week and so on. While the time frame of these candles will always be the same, changes in daylight savings time around the world can affect the times that these candles begin and end measuring a specific time frame.
Local time changes
For example, the 4-hour candle which opens at 6 a.m. U.K. time on U.K. MT4 platforms over the summer will change to 5 a.m. in the winter when the clocks go back meaning instead of closing at 10 a.m., it will close at 9 a.m. This is important when it comes to analyzing the charts and making trading decisions. If a trader is used to checking the charts at specific times each day and trading at the open or close of certain candles, they will have to make sure they adjust these times to still gain an effective view of the market and place their trades at the correct times.
Global time changes
However, given the global nature of Forex trading, it isn’t just local time changes which can impact the charts. The difference in daylight savings time around the world can also affect. For example, a broker based in Cyprus runs on GMT time. So, when the clocks move back at the end of October, the time at which the candles on its MT4 platform begin and end measuring each session will also move back by one hour.
To give a practical example of this. If you are in New York, looking at the MT4 platform of a European broker, the times will be seven hours ahead of you meaning that the 8 a.m. candle on the platform open will be at 1 a.m. local time. However, once the clocks go back in Cyprus, on October 28, the time difference will be one hour less, meaning that the open will now be 2 a.m. in New York. However, on November 4, the clocks go back in New York, the open of the four-hour candle will go back to being 1 a.m.
The next key dates to keep an eye on around the world for daylight savings changes are:
- U.K. 28th October 2018
- EU 28th October 2018
- U.S. 4th November 2018
- Australia 7th April 2019
Remember, always to check the time-zone that your MT4 broker is using as this will not still be the same as your local time-zone and make sure to set reminders for when the clocks change.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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