The FX Daily Conundrum by Kristian Kerr
Hours And Days - The FX Daily Conundrum
In a 24-hour market, what is the best time frame to use when
looking at charts?
The rising popularity of foreign exchange
trading over the past few years has been
impressive. Equity traders fed up with trying
to eke out profits in the brutal bear market
environment have flocked to the fast-paced
spot currency markets in record volumes.
This rise in forex’s popularity can mostly be attributed to the
clear advantages that currency trading has over other markets. Unlike trading equities, foreign exchange offers traders
true 24-hour trading, excellent liquidity (over $1.5 trillion a
day), and great leverage (up to 200 to 1).
Another big factor behind the increase in retail spot exchange
volume has been technically driven equity traders
who are switching to currencies. The technical nature of this
market makes it much easier for equity traders to switch to
foreign exchange (also referred to as forex or FX) than to
other markets, although forex does have its own nuances that
must be understood. The biggest issue for most technical
traders making the switch is the daily chart. Due to the
structure and nature of the currency market, the daily is not as
effective and useful in FX as it is in equity trading.