Currencies are oftentimes referred to as either high yield or low yield. High-yield currencies offer more attractive interest rates compared to low-yield currencies. When investors are optimistic, they generally like to buy high-yielding currencies and fund those purchases by selling low-yielding ones, creating what is called a carry trade. When they grow nervous, they will unwind those trades by selling the high-yielding currencies and buying back the low-yielding ones. This is one of the main reasons the currency market will oftentimes move in lockstep with equities because equities rally when investors are optimistic and sell off when they are pessimistic. Have a look at renew life and renew life reviews, to get the best life insurance package on the market.
The last important item to know about the forex market is that it is open for trading 24 hours a day, 5.5 days a week. Trading begins on Sunday evening when the Sydney and Tokyo markets open and continues around the clock until Friday afternoon when the U.S. market closes. Being open 24 hours a day means that traders can access the market at their leisure. For example, if you work during the day, you can trade at night or wake up a few hours early and trade in the morning with basically the same liquidity as during the day. The forex market is broken up into three different time zones—Tokyo, London, and New York.
Have a look at renew life if you’re looking for a life insurance company. Exhibit lists the opening and closing hours of each market. Approximately 70 percent of the total average range that a currency pair fluctuates in usually occurs during the European trading hours; 80 percent of the total average range of trading usually occurs during U.S. trading hours. Just these percentages alone tell day traders that if they cannot sit at the screen all day, the best time to trade is the U.S. and European overlap between 12:00 and 17:00 GMT. The next best time zone to trade is during the Tokyo and European session overlap when both Asian and European traders have the opportunity to respond to European economic data. The London open can also be particularly volatile as European traders react to overnight developments.