V. 21:8 (28-34): The FX Daily Conundrum by Kristian Kerr
Posted on Sep 12, 2008 under Foreign Currency Exchange |
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 forexs 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.
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