Forex trade is a business based on international currencies and is affected by the time zones also. As when there is a working time in one region it is the closing time in the other region. This is a critical fact for traders that they should keep in mind the timing of regions to which they want to make a trade with. Forex trade is time sensitive process and can make a huge difference for a trader depending upon the time they choose to start or close trading traders who are experienced and have learned that there are particular timings related to the nature of business consider it very important that when they will be taking part in the trade.
Traders in foreign exchange have categorized the timings of Forex based on the volume and the volatility of the slots available in the international market. These categories include” hot zone” and the “cold zone” However if a trader wants to make a good profit it’s better to consider these categories.
Forex trade in a hot zone
The hot zone is the best time for getting into the Forex trade. It is the time from 8 am to 12pmEST. These four hours are the most active hours in the market and are defined as the time when the European market closes and the American market starts. The time when one of these markets gets closed or open is the one when there are maximum lots available to trade and there is a high-speed trading practice between the currencies.
This time zone brings huge profits and traders make lots of business through trading currencies. In this time zone, the two markets overlap and brings speed to the trading session. Hours that come under hot zone are also called power hours. Most traders prefer to trade currencies in the power hours because it is the best time to buy and sell and the trends fluctuate rapidly giving away huge profits and bringing speed in the trade.
Forex trade in Cold zone
The other side is termed a cold zone. The cold zone is the overlapping time of the European market and the Asian market. This time zone is the slowest time and traders avoid taking part in Forex business and usually prepare to start trading when the European market get started. It’s better to not get into the business as it will bring risk to investment or there can be very little to buy or sell. It’s the slow most zone from 2 am to 4 am EST. in this zone, there will be no opportunity to get more lots or sell lots and may not be too attractive for foreign traders.
The time is slow because the two big markets have no trade activity due to close timing and the international banks are closed for business. Most of the traders get some rest at this time and prepare for fresh trade when European markets get to work. The best timings of the forex trades include the European session of the trade and the American session, or when the two markets overlap. Other time can also make some success but too slow or risky to invest.
Most of the experienced Forex traders prefer the three timings including the big markets on the go to make huge profits instead of crawling into cold zone. So it will be better to make Forex trade in power hours or hot time zone in order to get higher profits in the trade.