Mastering the Perfect Entry and Exit: the Best Times to Trade Forex
Forex is a global market where participants trade currencies. The market is open 24/5, and traders can open positions and exit at any time. However, just because you can trade all the time does not mean it is the best thing to do. Moreover, entering and exiting the market requires skills that traders must develop to become profitable. This article will give you more tools to perfect your entries and exits on Dominion Options.
How to Pick the Best Entry and Exit in Forex
Picking the best entries and exits requires a mastery of several aspects of trading. The best time to enter or exit can depend on the trading session, news volatility, and technical analysis. There are times in the market when some currencies move the most, and this is the best time to look for your entries and exits.
Meanwhile, fundamental analysis will allow you to anticipate a sudden increase in volatility. This way, you can either enter or exit before a significant event. Finally, technical analysis will allow you to look at price action and indicators that can signal the best times to enter and exit the market.
Forex Market Hours
Although trading in the forex market can occur at any time, there are four sessions when the market is most active. These sessions represent the working hours of specific regions like New York. When a session starts, it shows that markets have opened in that particular region, and trading volumes go up.
The four sessions in forex are:
- The Sydney session, between 9:00 am and 6:00 am UTC, when markets open in Australia
- The Tokyo session, between 12:00 am and 9:00 am UTC, when markets open in Japan
- The London session, between 7:00 am and 4:00 pm UTC, when markets open in the UK
- The New York session, between 1:00 pm and 10:00 pm UTC, when markets open in the US.
Professional traders make money when the market moves, and the market moves during these sessions. Trading when there is no movement cannot yield great results. Moreover, during these sessions, volatility and volume increase, leading to tighter spreads and less slippage. Therefore, they create the perfect conditions for entering and exiting trades.
Timing Your Trades in Forex
Timing your trades for the perfect entries and exits based on market hours can yield great results, especially if you understand which pairs to trade when. The four sessions create good entry and exit conditions.
However, the best time comes when these sessions overlap. At this time, trading volumes and volatility spike, creating the perfect time to enter specific pairs. For instance, when the London session overlaps with the New York session, volatility spikes in the EUR/USD pair. This particular session overlap contributes to over 50% of trading volume in a day.
Trading sessions
As a Dominion Options trader, you can easily check the sessions while trading on the cTrader platform at the bottom of the screen. This will help you stick to entering the market when volatility is high.
Fundamental Analysis
Fundamental analysis can also help you perfect your entries and exits. Some traders prefer to enter the market when volatility spikes. On the other hand, this is the time when other traders exit the market. Keeping up to date with news events will allow you to anticipate sudden changes in market volatility.
An aggressive trader might use a news event like the US inflation report to enter the market. Knowing that prices will move sharply after the report allows such a trader to position themselves. Here, they can enter after the news release or before, anticipating a big move.
Meanwhile, a risk-averse trader might use fundamental analysis to know when to exit the market. Although news leads to big market moves, it comes with a lot of uncertainty. Therefore, if you have been holding a position based on previous news releases, you should exit before a new report disrupts the gradual and sure moves. Such a trader will perfectly time their exit before the US inflation report.
News
On Dominion Options, you can stay up to date on upcoming events using the calendar on the cTrader platform. This makes it easier for traders to expect sudden changes in volatility and perfect their entries and exits.
Technical Analysis
Finally, technical analysis is another way traders can perfect their entries and exits. Technical analysis focuses on reading charts and identifying patterns that try to predict future price movements. At the same time, it involves the use of indicators that signal the best entry and exit times.
Technical Analysis
A simple channel on a chart can show you where the price bounces, giving you the perfect entry and exit. In the chart above, the price is on a downtrend and confined to a bearish channel. The channel has a clear support and resistance line.
For the best sell entry, wait for the price to retest the channel resistance. This is the perfect time to sell and hold the position. A channel also shows you the best time to exit. When the price hits the channel support, close the trade for the best results.
Market Sentiment
Market sentiment tool
Depending on the pair you are trading, the cTrader platform on Dominion Options will show the current market sentiment. At the top of the chart, you can find out how many clients believe the price will fall and how many believe the price will rise. Anything above 50% shows a bias to one side.
Therefore, if you have sold EUR/USD and suddenly over 50% believe the price will rise, it might be the perfect time to exit your trade. However, this strategy is useful when combined with other techniques, such as technical analysis.
Take Profits and Stop-Losses
Other than the above, traders can focus on using profit targets and stop losses to improve precision in their exits. A take profit will allow you to let a trade play out with little monitoring. At the same time, it removes the element of emotion from your exits, improving results.
Stop losses will allow you to exit losing trades with little emotion and at a set risk. This ensures that your exits are precise and they protect your capital. Here, you can also use a trailing stop loss, which will follow the price in a winning trade.
Advanced exits
With the cTrader platform on Dominion Options, you can use advanced take profits that partially close positions as the trade goes in your direction. Moreover, an advanced stop loss can move to breakeven depending on preset parameters to allow you to trade with no risk.
Conclusion
The perfect entry and exit depends on many factors. Some traders can combine some of these factors, like market hours and technical analysis, to get the best results. It is important to consider all the factors mentioned above to improve your trading results.
Moreover, to ensure you remain consistent in picking the best entries and exits, keep a journal where you write down your entry and exit criteria at the start of every trading session. Failing to take into account all the above can mean entering and exiting the markets at the wrong time. This will translate into poor trading results.
Join Dominion Options today and sharpen your entry and exit skills. Use the latest software to pick the best times to open and close your positions.
