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Day Trading the Currency Market

Thu, Aug 10 2006, 11:44 GMT
by FXstreet.com Team

FXstreet.com

About the Author

Kathy Lien is the Chief Currency Strategist at Forex Capital Markets LLC (FXCM). Kathy is responsible for providing research and analysis for DailyFX, including technical and fundamental research reports, market commentaries and trading strategies. A seasoned FX analyst and trader, prior to joining FXCM, Kathy was an Associate at JPMorgan Chase where she worked in Cross Markets and Foreign Exchange Trading.

Kathy has vast experience within the interbank market using both technical and fundamental analysis to trade FX spot and options. She also has experience trading a number of products outside of FX, including interest rate derivatives, bonds, equities, and futures. She has a Bachelors degree in Finance from New York University. Kathy has written for Stocks and Commodities, CBS Market Watch, 'ActiveTrader', 'Futures' and 'SFO' magazines. She is frequently quoted on Bloomberg and Reuters and has taught seminars across the country. She has also hosted trader chats on EliteTrader, eSignal, and FXstreet.com, sharing her expertise in both technical and fundamental analysis.

Book Synopsis

The currency/foreign exchange (FX) market is by far the largest financial market in the world, with trading volumes surpassing $1.9 trillion a day. Although primarily dominated by a worldwide network of interbank traders, a new era of Internet-based communication technologies has recently allowed individual investors to gain direct access to this popular -and profitable- market.

Written by Kathy Lien - chief strategist for the number one online currency broker in the world- 'Day Trading the Currency Market' reveals a variety of technical and fundamental profit-making strategies for trading the currency/FX market, and provides a more detailed look at how this market actually works.

Designed for both the advanced and novice trader, 'Day Trading the Currency Market' contains something for everyone. It touches on the major FX market basics or currency characteristics that all traders -particularly day traders- need to know, and contains actionable information on which you can base some of your trading strategies. This comprehensive guide opens with a straightforward discussion of general issues, such as the emergence of the foreign exchange market, who the major players are, and significant historical milestones, but quickly delves into more detailed topics in the following sections:

• What moves the currency market- factors that impact both long- and short-term price movements.
• What are the best times to trade for individual currency pairs- through an outline of major currency pair trading activity (in different time zones), you'll discover when pairs are most attractive
• Trade parameters for different market conditions- teaches you how to first profile a trading environment and then know which indicators to use for that trading environment.
• Technical trading strategies- covers some of the most important trading strategies for day traders and swing traders. They run the gamut, from "Fading the Double Zeros" to the "Inside Day Breakout Play".
• Fundamental trading strategies- illustrates how to trade off commodity prices, fixed income instruments, and option volatilities; and covers intervention-based trades as well as the secret moneymaking strategies used by hedge funds.
• A profile of major currency pairs- discusses the unique characteristics of each major currency pair, from what drives their price action to which economic data releases are most important.

Filled with in-depth insight and expert advice, 'Day Trading the Currency Market' can show you how to enter this highly competitive arena with confidence and exit with profits.

Chapter 5: What Are the Best Times to Trade for Individual Currency Pairs?

"The foreign exchange market operates 24 hours a day and as a result it is impossible for a trader to track every single market movement and make an immediate response at all times. Timing is everything in currency trading. In order to devise an effective and time-efficient investment strategy, it is important to note the amount of market activity around the clock in order to maximize the number of trading opportunities during a trader’s own market hours. Besides liquidity, a currency pair’s trading range is also heavily dependent on geographical location and macroeconomic factors. Knowing what time of day a currency pair has the widest or narrowest trading range will undoubtedly help traders improve their investment utility due to better capital allocation. This chapter outlines the typical trading activity of major currency pairs in different time zones to see when they are the most volatile. Table 5.1 tabulates the average pip range for the different currency pairs during various time frames between 2002 and 2004 (...)" 

**Click the image below to download the full Chapter 5 for free**

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Published on  Tue, Apr 3 2007, 12:02 GMT