Forex Market Hours

May 31, 2009 - Market Hours

As you may know, forex is open 24 hours, from 17h (EST) Sunday to 17H (EST) Friday. That’s 7 hours for Sunday from 17h to 00h, 4 x 24h Monday through Thursday and 17 hours for Friday, from 00h to 17h, for a total of 120 trading hours or the equivalent of 5 days.

However, the various market centers open and close at various hours as you can see below.

This table is in EST.

Frankfurt is open from 2am to 10am.
London from 3am to 11am.
New-York from 8am to 4pm.
Sydney from 6pm to 2am.
Tokyo 7am to 3am.

In pink, I put the periods where 3 markets overlap:
From 2am to 3am: Frankfurt, Sydney, Tokyo
From 3am to 3am: Frankfurt, London, Tokyo
From 8am to 10am: Frankfurt, London, North America

In blue, you’ve got the periods when 2 markets overlap. And in green, only one market is active.

If you want to make yourself a table like this in your own time zone, simply convert your time from EST or go to this time zone converter:
http://forex.timezoneconverter.com/

Live forex quotes for over the week-end

May 31, 2009 - How to see live quotes when markets are closed

So you were in a trade Friday and were hesitating: should I close it or leave it over the week-end? You decide to keep it because it’s doing well and at 17h EST (or whatever your time zone is) the prices on your screen go dead. Markets are now closed. And you have to wait ALL THE WAY to Sunday evening to see if your decision was the right one.

Well, there’s another solution. I use this site to track price fluctuations during week-ends or whenever my broker dies for a while or whenever I need a feed on a computer where MT4 isn’t installed. They don’t have all the pairs, but they have the major ones. There are a few sites which supply after market hours quotes, but I like this one the best. It looks like this:

So even though this is Sunday afternoon at 14H36, I get to see where prices are in relation to my open trades. At Friday’s close, for instance, GBPJPY closed at 153.99 as you can see in the pic below. But now it’s up to 154.26.


There’s nothing I can do since my broker only opens in about 2 hours, but it’s nice to keep track of what happens during the week-end and if gaps are to happen, well at least you’ll be warned ahead of time.

However, don’t go buying a new car if you see the numbers in your favour during week-ends because they tend to deflate and revert back to where they closed before markets even open. Also, if they show you’re in serious negative territory, don’t go jumping off any bridge, again for the same reason. But sometimes they don’t revert !!! Whether in your favour or not. Ah, forex IS exciting !

Anyway, you now have a tool to see prices fluctuate 7/7 24/24 in case you become a forex junkie like me! Here’s the link:

http://www.forex-markets.com/quotes.htm/

nb: you need to get rid of the pop up demo thing, right click and close

Best Performers

May 30, 2009 - Best performing pairs

Well, yesterday’s close was a bit higher than what I posted earlier in the afternoon, at 1,256.

Now, still in line with margin and initial capital, nothing stops you from starting slowly, if your initial capital is small. I just finished my calculations and here are the latest best performers :



So, you can see that we’ve got top performers like gbpchf, eurjpy, gbpaud, etc. You could start with only one pair with an active EA. All you need to do is to uncheck “Allow live trading” for all the other pairs. To do this, right click on a pair, select Expert Advisors, Properties and the Common tab. This way, you’ll be limited to one active pair (but keep all pairs active in your observation platforms).


Or if you prefer, you can check “Ask manual confirmation” and each time there’s a signal, you analyse the situation and decide to go ahead or not.

I love Saturdays but hate the fact that there’s no trading. Have you figured out by now that I’m a trading addict ?? But no trading is a good thing, really, because I get some time to do some calculations, analysis, etc. I just love trading - specially weeks like we’ve just had with a lot of action.

I remember back about 3 years ago, I was following some live webinar (was the first time I saw that word that day) on trading but this was with securities. I was trading these at the time, more specifically the energy stocks, and anyway at the end of the webinar, someone mentioned forex and the presenter said something like “Forex, wow yeah that’s where the real action is going to be”. I had no idea what he was talking about as I didn’t know what forex was.

Well that was the end of my stock trading years. I immediately totally fell in love with forex. And haven’t stopped ever since. And I’m glad I did what with all the stock market crashing we just went through – and it doesn’t look over anytime soon. With forex, this is what I explain to friends, there’s no “crashing” possible because when one pair goes down, the other goes up. You just need to be in the right direction. What’s “bad” with forex is when nothing much happens. And you better be on your toes when mega trending starts because you won’t believe the numbers on the right of your screen, things like +1000 pips for one single pair (I remember back last June, I think, GBPJPY rendering this much in one single trade within less than a week !).

Anyway, I’m happy you found this blog and are reading this because I feel a kinship (or something like that) with other traders. We’re a special bunch, I’ll tell ya! I can’t even imagine someone not being interested in trading forex. My friends aren’t – although they’re interested in the fact that “it pays pretty impressive sums” (even though I don’t disclose specific numbers) but they know I’m making a good living without needing to have a job in some office like them. It does require some work and analysis and time, but when it’s your passion, it doesn’t matter. One of my friends has a Registered Retirement Savings Plan and doesn’t even know what exactly he’s invested in. He took some mutual funds without much interest in who they are or what they do, and that’s that. And he just “hopes” it’ll go well. Jeeze I can understand that not everyone is passionate about money, but most of my friends are like him – they kinda don’t really “want to know the details”. I guess that’s why mutual funds exist – by the way, I hate mutual funds. Maybe some time I’ll get into the details of why. But basically, they exist because my friends and people like them exist. Because if everyone was interested in their own investments, one thing is for sure, mutual funds wouldn’t exist in such large numbers. When I was trading stocks, I constantly outdid them year after year sheeeeeesh, by 50% even, without even doing much more than monthly analysis then “buy and hold” or holding some index funds (which simply track a given index or sector).

It’s raining here. A nice little spring drizzle. OK, I’m off to do some more analysis – be back later.

Understanding leverage and margin calculations

May 29, 2009

How to calculate margin and leverage.

I mentioned leverage and margin yesterday and I’d like to complete the explanation today.

The effect of leverage on your account is like a magnifying glass. If you’ve got 100:1 leverage and your initial capital is $1,000 this means your margin level will be at 100,000%. Let’s say you place a trade for 0.1 (one mini-lot) of NZDUSD which uses $63.75 of margin (nzdusd is currently at 0.6375) this is what you’ll see:



Now, if your leverage was 200:1, this means the cost of the trade would be half of the above, or 31.88. See how this affects your margin level:



You guessed it, it’s now twice as much.

So, how is all this calculated?



Your BALANCE is your initial capital + any closed trades (positive and negative).
Your EQUITY is your balance + your current profit or loss.
As we’ve seen, your MARGIN is the amount it costs you to enter a trade, based on your leverage and which pair you’re trading.
Your FREE MARGIN is your balance minus your used margin + your current profit or loss.
And your MARGIN LEVEL is your equity divided by your margin.

Profitable week

Well we’re finishing off the week (and the month) in good profit at + 1,240 :



Here is a close-up of GBPJPY.



I had some technical problems during the night (got disconnected) which causes a false impression of gaps. Anyway, GBPJPY is our winner at over +300 pips and apart from a trade just barely taken (after I reconnected), along with a fledgling gbpchf, all are nicely in profit.

Let’s now see what June brings next week. We’ve still got a few hours before markets close but we’re off to visit friends. Have a GREAT week-end all and see you at market open on the first of June !

How much is a pip worth ?

May 28, 2009

How much is a pip worth ?

So how much is a pip worth, you ask?

Well, it depends on a few things: The size of the lot, the pair and the base currency in which you are trading. First, let’s look at the lot sizes. Let’s assume EURUSD here (or any pair ending in USD).:


If you enter 1 standard lot of EURUSD, each pip will be worth $10 USD. With a spread of 2 pips, you’ll be –20 pips right off the bat, then when it goes up 2 pips, assuming you went long, you’ll be BE at (Break-Even, or zero) and if it then goes up 10 more pips, you’ll be $100 USD richer (assuming you exit right away, of course).

The same trade taken with a mini-lot will end up being worth $10 USD because each pip is worth $1.

Well, then, why not take standard lots instead of mini-lots ?!?!

Here’s why. The cost of the trade, and your leverage/margin. EURUSD is currently at 1.3941. At 100:1 leverage, one mini-lot will cost your margin 1.3941 * 100 = $139.41. But one standard lot will cost you 10 times more, or $1,394.10. Let’s clear up the leverage first :



So you can see that the leverage, as well as the size of the lot, will generate vast differences on the cost of the trade. And this will in turn influence your margin. Very simply put, if you’ve got $1,000 capital, with 100:1 leverage, your margin level will be at 717% on a mini-lot. And you simply won’t be able to buy a standard lot because it’s more than your total capital. I’ll come back to leverage and margin calculations a bit later, because these need to be explained in detail in order to be clearly understood. But here are the basic calculations:



Now, we could consider 1 mini-lot with 100 leverage, then to be a reasonable trade. But what happens to your margin if things turn around? Well at –100, your margin will be at 645%, so if you put a stop loss there, you won’t be in trouble. But if you forgot to put a stop loss, and it goes to –300, then your margin will be at 502%. And at 100% you’ll be dead meat. But you’d get out before reaching that of course.

So, 1 mini-lot of EURUSD, with 100:1 leverage costs $139.41 USD. But what if you’re trading in another currency than USD. Well, you need to convert to your own currency to get your real cost. For instance, I trade in CAD. Since USDCAD is currently at 1.1138, my cost will be 139.41 * 1.1138 = $155.27 CAD. If you’re trading in EUR, your cost will be 1 / 1.3941 * 100 = € 71.73
EUR. If you’re trading in pounds, since GBPUSD is currently at 1.5934, your cost will be 1 / 1.5934 * 100 = £ 62.76 GBP.

Later I’ll upload my Excel table which automatically calculates:
- pip worth converted into your own currency
- cost of trade based on leverage

Here’s an example of various pip values:



And here’s an example of various costs based on leverage. See how the amounts are different, depending on which pairs you’re looking at:



Oh, and as I mentioned, these are real-time values because the Excel table links to your MT4 feed, so you’ll see the values change directly in the Excel sheet. I’ve got to fix a few things before but I’ll try to get it done as soon as possible. For those who want to experiment, here are the basic calculations you’ll need:

Pip worth (by hand)

(one pip, with proper decimal placement/currency exchange rate) x (Notional Amount)

Using EURUSD as an example, we have:

(.0001/1.3941) x EUR10,000 = EUR 0.71730866

If you want the pip value in USD, multiply EUR 0. 71730866 x (EURUSD exchange rate):

EUR 1.3941 x 0.71730866 = $1.00

The JPY pairs are a bit different. Pips are not the 4th decimal, like above, but rather the 2nd:

So for USDJPY:

(.01/96.88) x USD10,000 = $0.97

or 97 cents per pip


Pip worth (with Excel)

Make sure you’ve got an instance of MT4 running.

In Excel, enter this formula into a cell:

=MT4|bid!EURUSD

This will give you the current value of EURUSD. Then enter the above calculations to get the pip worth in your own currency.

What does a pip stand for?

I almost forgot an important note on what a pip stands for.

À pip means "Percentage in Point". So it's the decimal point on which we trade. For most pairs, it's the 4th decimal point after the period or 0.0001 and for the yen pairs it's the second one or 0.01.

Things you can do while trading

May 27, 2009

You can stare at your screen, of course, we’ve all done that. But I now find that it’s even less exciting than watching a clock tick. When a trade is taken, whether automatic or manual, you need to let it “breath” and not baby-sit it and watch every pip up, pip down like some maniac – especially early in a trade. You need to let go. With this system, we have an audio alert when trades are taken, so no need for monitoring. Just come check whenever you hear the alert on the hour. Take note of the situation, new trades, balance, etc. and make any decisions about TP or SL (or do nothing), then go back to doing something else and let the trades mature.

One thing I personally like to do while trading is playing games – all sorts of games whether computer-based (I like simulations) or on-line or even a simple card game like Spider Solitaire, and I arrange my screen so that I can see the balance. Then every time I click the bottom pack of cards, my eyes take a glimpse at the balance and this way I get a feel of where things are headed, but without actually staring at the trades themselves.

I also do lots of things on the net or on my own computer and minimize my platforms and come see how things are doing once in a while.

And something I also do is have my full screen in front of me as I knit. I know this won’t appeal to all (knitting and trading, what a weird combination ?!?) but when you knit complex creations, you see, you need to constantly be counting in your head, so that the various patterns come out right, so you can’t really be doing something like watching a movie or even speaking with someone – but having your screen up and glancing once in a while is just perfect, believe me. PLUS in the end, you have a tangible piece of work, created by you, which you can give as a gift or keep for yourself.

Alright, enough about knitting – here’s a pic of my Spider Solitaire screen:



As you can see, things are looking good in the trending world. Yesterday’s three trades (gbpusd, gbpjpy and eurjpy) are currently + 82, +146, (-14 yesterday) and now +60. We also have gbpchf at +144, gbpaud at +122 and two baby trades recently taken at +7 and 0. For a total of just a bit over +600 pips.

I have always noticed that Wednesdays tend to be days where things move a lot - I like Wednesdays. Might be because of triple swap, but I doubt that now, with interest rates so low and especially so close, the whole carry trade thing has as much weight as it did a few years back when, for instance jpy was at 0.5% while gbp and nzd were over 5%. Anyway, might just be that it’s the middle of the week. Thursdays also tend to move a lot, but less than Wednesdays. Mondays and Tuesdays tend to be slow and Fridays, well I’ve seen extra slow and extra moving, so this one is less predictable – same goes for Sunday evenings.

Right, so tomorrow being Thursday, we’ll see how things have evolved from now. See you in 24 hours!

100 pips in one hour

May 27, 2009

Things are sometimes incredible. I told you Wednesdays move. Here is a pic I just took which is about an hour later than the one above and we're now at +700 pips:


Look at GBPAUD, our winner once again, currently at + 207.

And the most amazing thing is that I did NOTHING (actually I was cutting the hedge outside). I could close out now and be 100 pips richer than 1 hour ago (or 700 pips richer than a few days ago). Just imagine if you had enough capital for your pips to be worth 10$ (standard lot). I’ll speak about this more in my next post, as pip worth is sometimes hard to grasp. And I’ll also try to upload an Excel sheet I made to track the exact pip worth in real-time. The sheet connects to your MT4 feed and updates in real-time, quite fascinating to watch.

Slow day

May 26, 2009 - Slow day again


Things were a bit slow today, not much action on either platform. They're both close to flat. So how do you make money on days like this (and yesterday, which was a holiday) ?. Well, you can either scalp (which I have before but don't anymore) or stay on the sidelines. Or pick and choose manually the "best looking" pairs at the moment.

If you want to "scalp", simply move down to the lowest time frame with which you are comfortable (the 5 mins was what I liked) and manually enter trades after crossings in the direction of the platform which seems a bit more performing than the other. And after you get a small profit (depending on the pairs that'll be between 5 and 20 pips) put your Stop Loss to BE + 1 (Break Even +1). This way, your trade is now secured and even though it's just one pip, please, a pip is a pip alright. Always better than MINUS 50 pips. Then trail your SL as you wish.

I'm personally in a 3 trades right now, following the trending platform (pick & and choose):


As you can see, all three trades were taken at the same time, at 1 o'clock this afternoon (EST).

There's a small indicator I got tailor-made a few months back, which gives you some basic information about each pair you're watching. I was part of a much larger indicator which took up a lot of screen and I got a programmer to strip the code to the basics. Here it is:


You can play with the settings to place it where you like on your screen. It's called Signal Bars Info. I'm going to upload it to the DOWNLOAD link in a second.

Holiday Trading Memorial Day

May 25, 2009 - Memorial Day

Today was a holiday in the US and Great Britain, so not much happened trading-wise and basically this was a dull day.

I spent my time mostly trying to make this blog look decent but I’m having all sorts of trouble. I can’t find how to make the pictures larger, they’re so small no one can see them clearly – so I tried to upload them to the DOWNLOAD link where you can see them larger, but it says « 8 pictures » but if you click, you can only see ONE grrrrrr. Then I tried to make the main blog column larger but it puts a vertical line and I can’t type farther than the default column, mega-grrrrr. That’s among other frustrations, but I’ll get things into order soon, the main thing is the content is there, the container will have to wait a bit.

In the meantime, I’ll try to make my pics larger by separating my screen into 2 sections. Hope you can see better. This is what markets look like right this minute at 21:28 EST:






So we're up +285 pips since last Wesdnesday, only one new trade taken since markets opened yesterday, but as I mentioned this is a holiday.

Alright, I'll see you all tomorrow !