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The Best Time to Trade Forex in GMT

EUR USD best trading hours
The best trading hours for momentum strategy (and trend strategy) for EURUSD forex pair is period from EUR USD opening hours till GMT noon (London open till noon) and the period when USA stock exchange overlap EUR stock exchange (14.30 GMT – 17.00 GMT)

Below is typical EURUSD daily volatility:

Assia session: This is low volatility period. Good for scalping forex strategy.
EU session open – EUR USD opening hours: EU session starts at 7.00 and 8.00 GMT time (London and Germany stocks exchange starts then). Volatility dramatically increases in that period. One hour after the EUR USD opening hours trend is formed and volatility increased. Till noon volatility and trend should be in the same direction (this is the most common scenario but not the rule).
EU session consolidation: this is the period from noon till the USA market opens in GMT. In this period are the most common breakouts or range periods.
USA markets open – 14.30 GMT USA markets open. In this period trend is formed again and the next several hours continue. This is USD trading time.
USA session consolidation – this is a period which starts from 18.00 and the next several hours’ volatility decrease till the USA market close and Asia session open.

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One of the main advantages of day trading in foreign exchange (forex) is that the trader can trade all 24 hours in a day. However, a trader is likely to make money only when there are a large number of transactions in the forex pair in which he is trading. Many traders want to find out the best time to trade forex GMT, especially for the popular EUR/USD forex pair. During these hours, the forex pair should be volatile enough, so that the profit generated is more than commission or spread which has to be paid to the broker. Since working long hours can reduce the efficiency, the traders will usually determine the period when the forex pair will fluctuate most and then trade only during these three to four hour periods.

Market timings, EUR/USD price Volatility and EUR USD intraday strategy

During the week, the forex market is open all the 24 hours a day, since time zone differences ensure that a global market is always open. However, traders should be aware that the forex pairs which are traded in each of the forex markets will be different. Hence the peak time for the activity for each forex pair will be different. When the European forex markets are open, forex pairs with the British Pound(GBP) or euro(EUR) are traded extensively. Similar when the United States, Canada forex markets open, forex pairs including the Canadian dollar(CAD) and US dollar(USD) are actively traded. For day traders who are dealing in the EUR/USD pair should know that they will be most active when both the New York and London markets are open. On weekdays, these market timings in Greenwich Mean Time (GMT) are between 0800 and 2200 hours. Tools for showing the timings for forex markets are available.

Acceptable timing for day trading in EUR/USD

There are volatility charts available which show the pip movement for the EUR/USD pair for different hours of the day, in GMT. It is observed that the pip movement will increase significantly starting from 0700 hours daily and continue to remain higher to 20.00 hours. The pip movement for each hour then reduces greatly, so there is less volatility which the traders can profit from. Hence day traders should place their orders between 0700 and 2000 hours GMT. If they trade outside these hours, the pip movement is usually not enough to compensate for the broker commissions. Though the volatility of the forex market varies daily, the timings when the markets are most volatile do not change. In some areas, daylight saving time may affect the trading hours for forex traders.

The ideal time for day trading

Though a forex trader can start trading in the 13 hours starting from 0700 hours GMT, most people have a busy schedule and cannot spend all their time in forex trading. Hence the forex traders would like to find out when the market is most active. Typically the market is most volatile when both the London and New York forex market is open for the three hours between 1300 to 1600 hours GMT according to statistical data available. Since the number of forex trades in both the markets is high, the spreads are the lowest, making it is easier for a forex trader to make a profit since he has to pay lower commissions. Also, the volatility of the forex market is also highest during this period, so it is easier for a day trader to make a profit.

Trend traders need to trade during EU session open and in the period when EU and USA session overlap. Breakouts traders need to wait for important news or period when the trend is consolidating. Scalpers can use Asia session small volatility to make better profits. Of course, all these tips are not rules and different strategies and trading habits can give various outcomes.

Systematic Risk in Detail

by Fxigor

What is the systematic risk of investments?

Companies and investors face different kinds of risks that affect their profit or returns on their investment. The systematic risk is the risk caused due to macroeconomic factors affecting the economy that cannot be controlled by either the companies or investors. As a result of this risk, the returns which are earned from investments that are risky will fluctuate. Some factors which affect the profit of a business can be controlled by the business and its management to some extent and are the unsystematic risk of doing business. These factors include labor disputes and mismanagement for a company. The total risk involved for investors can be categorized into unsystematic risk and systematic risk.

Systematic Risk explained

Many unexpected events occur regularly which cannot be controlled by the investors and these are the systematic risk of doing business, investing. This risk can be only avoided by avoiding any investment which is risky. In reality, this is not a viable option for most investors since the only investment options available to them, in this case, would be the CDs and T-bills of government-related organizations. Hence every investor should be prepared to consider these systematic risks while deciding their strategy for investment if they want good returns.

To compensate for the systematic risks while investing, most investors will expect a premium on their risky investments. To explain with an example, if 5% return is offered for a T-bill which is risk-free, the investor will expect 10% returns while investing in shares. The investor hopes that the additional 5% return on shares will compensate for the systematic risk he is taking while investing in shares. Due to macroeconomic factors, the investor can also make a loss on his share investment and this is why he tries to get better returns.

Systematic risk should be considered the opportunity cost of choosing a particular investment when less risky options are available. Investors consider their personal choices and also financial goals while choosing their investment options. For a T-bill with a 3% return, though the returns are low, there is no systematic or other risks for the investor. On the other hand, for a stock offering 15% returns, it is possible that the investor will lose his money, and there is also the opportunity cost which should be considered when he chooses this option compared to the low-risk option of T-bill.

It is usually not possible for investors to avoid all systematic risks if they wish to get good returns. However, they can reduce the systematic risk involved by diversifying the investment. This ensures that even if they make a loss from one investment, the profits from other investments will compensate for the loss. Additionally ensuring that resources are utilized properly and procedures are followed to ensure that only quality investments are chosen, can greatly reduce the risk involved. When a company is being sold, it is important to consider the systematic risk involved since the buyer will be willing to pay a lower amount for the business to compensate for the risk involved in the deal.

Managing Systematic Risk and Unsystematic Risk

Investing money is risky, the investor may lose some of their money. Experts believe that the greatest risk for investors is losing their capital amount permanently. Hence to avoid losing their capital completely, investors have to adopt a strategy for managing the risk for their investment portfolio. For this, they will have to understand how unsystematic and systematic risk will affect their portfolio. They will also have to find out the most effective way of reducing the risks involved in their investment.

Systematic risk is related to a large number of factors affecting the entire investment market, it is not related to a specific risk related to a particular investment. Changes in the bank and other interest rates, inflation, fluctuation in currency exchange rates, wars, recession are some of the macroeconomic factors that affect the systematic risk. These macroeconomic factors affect both the direction in which the market moves and the volatility. The systematic risk cannot be controlled by a single company or individual.

Asset allocation is widely used to reduce the systematic risk involved to some extent. Since the value of asset categories will change in a different manner to changes in macroeconomic data, investors can reduce the volatility in their portfolio by investing in asset classes with a low correlation to each other. When the value of some asset categories like domestic equities, stocks, are increasing, others like bonds, cash will decrease in value and vice versa to reduce volatility. Experts also believe that they should consider the value of the assets while investing. They should invest more in bargains, and avoid investing in assets that are considered overpriced. To reduce systematic risk, they should also invest in cash which is often not appreciated.

Unsystematic Risk

Risk which is specific to a company or industry is considered an unsystematic risk. This risk can be attributed to a specific investment or investment group. It is not linked to the returns from the stock market. It also called the diversifiable, residual or specific risk. These risks can be controlled to some extent by the industry sector or company. These risks are divided into financing, business, credit, product, legal, liquidity, political and other risks. Unsystematic risk can be almost completed eliminated by diversification. The investor with only one stock or bond will suffer great losses if there is a problem with the stock. On the other hand, if the investor has a diversified portfolio of 40 different investments, the losses to problems in a particular stock will affect the portfolio less.

Probability, Expected Portfolio Value

For calculating the expected value of a portfolio, the possible returns and probability of each return will be considered. One way to measure risk is determining the deviation and how the probability of the deviation compares with the expected returns. Diversification reduces the unsystematic risk and portfolio risk is mitigated by allocating assets properly. Mitigating risk ensures that the portfolio manager has more profitable assets with higher risks resulting in portfolio optimization. The portfolio manager can handle a specific amount of risk and if the systematic and unsystematic risk are lowered, he can opt for investments offering higher returns.

Systemic vs. Systematic Risk: What’s the Difference?

In order to understand systemic vs. systematic risk both of these terms a bit more closely. If an event causes a major setback to an economy or a particular industry then it is known as a Systemic Risk but if the market experiences a consistent and everlasting risk for an extended time due to a number of reasons then it is known as Systematic Risk. The information provided in this write-up will help you in understanding the basic differences in these two terms.

Difference between systemic risk and systematic risk

Systemic risk can give a complete shock to the system from outside whereas the shock provided by the systematic risk based on a number of factors can be ongoing and on a day-to-day basis. For instance, the financial crisis of 2008 that has triggered massive implosion in the world market was based on the threat of failure of one of the major banks of the US. It is a good example of systemic risk. The risks based on the changes in interest rates, corporate health, geopolitical issues, etc. are some of the examples of systematic risk.

Moreover, it is hard to predict and scale the systemic risks whereas in some cases it is easier to predict and scale systematic risks

Systemic risk can be defined as the risk related to the complete breakdown of a sector, industry, financial institution, business, financial system or the entire economy. Some of the small but particular problems like leakage of information of website users or flaws in the security of bank accounts etc. can also come in the category of systemic risks. In other words, systemic risk can be defined as a substantial danger occurred in a company that can widely influence the entire financial system.

Systematic Risk, on the other hand, is not easy to define as it is a bit vague. In simple words, it can also be used as the term market risk’ which involves the dangers faced by the entire market and is not easy to resolve even if you spread your holding into several branches. The basis of such widespread risks for the market can be the period of weakness or recession in the economy, decline or rise in interest rates, wars, fluctuations in the prices of the commodities or currencies, etc. However, the systematic risk can be managed but cannot be eliminated by following the strategy of allocating the assets in different ways.

Some examples of systemic vs systematic risks

In 2008, the failure of Lehman Brothers that has affected the entire economy and financial system is one of the most recent examples of systemic risk. This failure has caused a domino effect on the financial system of the entire world because Lehman Brothers was a big company. The government has to intervene to resolve this problem.

One of the latest examples of systematic risk is the economic recession faced by the entire world in the late 2000s. at that time, people who have invested in the market, have seen drastic changes in the value of their investments due to this economic crisis. The assets of different classes were affected differently due to this recession.

Thus, systemic risks are basically different from systematic risks.

What Does Sentimental Value mean in Finance Industry ?

by Fxigor

Sentimental Value

What does sentimental mean?

By dictionary, a sentimental person is strongly influenced by emotional feelings, especially about happy memories of past events or relationships with other people, rather than by careful thought and judgment based on facts.

But in business and finance – we have Sentimental Value too!

By definition, sentimental value is the value of an object that is derived from personal or emotional association rather than its material worth.

Believe it or not, but the sentimental value of stocks can be a game-changer. Studies show that there is a positive correlation between the items bought and their relative value. Coca Cola maintains a strong stock value in part because of the sentimental value. People buy the product, but also enjoy the merchandise associated with it. That adds to the fun involved with the investment process as well. New investors will seek out the Sentimental Value before they make a decision. That can influence their trades and really change the market today. Learn more about what sentimental value will mean for the products being described.

Evan in trading Sentimental Value is correlated with emotions – and that can be bad for trading…

My personal story and Sentimental Value in currency exchange
It was several years ago. As a trader, I received from analysts very bad reports for NZD. Technical analysis, trend lines, bad reports – everything showed that NZDUSD would go down. I tried to sell NZDUSD several times and I didn’t success to make any profit. Price dropped and then made another bullish attempt, stronger. I build a bad emotional association with NZD. After few months NZDUSD went down more than 1000 pips.

Sentimental value of a product

First, it helps to follow the supposed sentimental value of a product. Coca Cola is a great example of that phenomenon today. They introduced New Coke, which was widely panned by their fan base. That is adding to the idea of backing the art of investments. Some people think that investing should be more of an art form, as opposed to an exact science. Some trades might just not make much sense at first. But over time, the trades will start to make sense in terms of sentimental value. Think about the incredible new options that people want to consider.

These products sell well over the years for a good reason. People back up stocks that are sure to win on the market. But sentimental value represents much more than that over time. The stocks are constantly in flux and investors can learn more about stocks. Trust the leaders to provide information that people genuinely want to know in time. That should direct people towards buying up stocks for sale. The cost is defrayed and the value tends to rise over time. That should convince new buyers that the option is right for their needs. The cost is going up and the details will be made clear to them as well.

Follow the direction of an experienced trader on the market. The experienced pros have some smart advice to many new traders. They recognize the challenges that traders might face along the way. The new sentimental value concept is gaining steam among them. See the term bandied about in many of the new publications in the world. That adds to the credibility of the sentimental value concept as well. The details are emerging and people want to learn about these ideas in short order. Their publications often influence daily trades and new investors should take notice of that fact too.

The reviews for products will often mention the sentimental value involved. These reviewers are picking up on these details over time. That helps new traders learn more about the sentimental value in short order. The reviews offer a good look at the new details that are emerging. Think through the next move made on the open market as well. Sentimental value can drive the sales process and keep customers in the loop. The reviews for the products should amaze anyone who is interested in the details. Write new reviews and follow up on the sentimental value trend on the market today.

The price tag for stocks will keep investors coming back for more information. These prices are exactly what people need going forward. The price tag reflects the sure quality that people want to secure. The investor will consider all factors with that kind of arrangement in place. Think through the deal and make the trade possible in the long run. The prices are worthwhile and people want to learn more about the program. The price tag should influence trades according to the best theory on the market. Trust the experts to learn more information as is needed.

The details are worth reviewing for a lot of reasons. The stock price tends to change at a dramatic pace. The programs are worth a new look in good time. The cost is effective and the deals are extended to new investors. The sentimental value often sways some of the choices that people will make in time. The stock price is always a leading indicator, but the cost will be defrayed for those on the market. Trust the leading indicators and follow through on the project as indicated. That should be an informative experience for all involved.

Get a prospectus and learn about the upcoming changes to stock. The sentimental value might be discussed in various ways. The stock leaders want to drum up support for the stock market. The sentimental value is popular for all the right reasons in time. Trust the details and evaluate how the program will work as is needed. The stock chart is a critical consideration that people want to evaluate. The program is held in high esteem and customers want to learn more about it over time as well.

Think about sharing information and following up on some trends. The sentimental value of the stock price is going to be discussed. Join up with like-minded people and come to respect the trends. The sentimental value of the purchase is set in place. Trust the details and come to respect the program is a good time. These trends are popular for all the right reasons as of now. The stock price is helping people learn all the right details. These options are going to amaze people who want to get work done right. The stock value is going to amaze people who want to follow along.

The chart value is memorable and can change the perceptions over time. The trends are on the rise and new customers can follow the discussion in a good time. The chart has important details that people want to understand. Trust the leadership and follow up on the story as well. The chart can teach people much more information about the concepts now underway. The leadership can explain the chart value to those that are interested in it. Trust their dedication and see how the project is going forward in time for the smart investor.

What Does the Circular Flow Model Illustrate

by Fxigor

What is circular flow model in economics?
In this article, you will learn all about the model of circular flow and why it is important to the economy.

What Does the Circular Flow Model Illustrate? Circular Flow Model describes the path of money throughout an economy. In today’s society, there is a seemingly non-stop transfer of currency on a daily basis. This covers the path of goods from producers to consumers and households, for the exchange of money.

A thing to note is that the rate at which products flow is never at a stable rate all the time. Over time the rate changes along with the state of the economy. The rate fluctuates with heavy dependence on the state of the economy. When the economy is prosperous and strong, there is likely to be a high rate of flow for goods and services. The opposite occurs during times of economic recession. During these times there is a low rate of flow for goods in order to match the lack of flowing money and resources.

Another thing that occurs when it comes to this model leakage. In this case, the leakages that may occur are taxes that are induced by the government, this drastically alters the amount of currency in circulation for the purchase of products and services. Similarly, money that is paid towards other countries also subdues the path of money in a given economy.

Basics of the Circular Flow Model

This model is comprised of two main aspects, goods and services and factors of production.

What does the circular flow model show

The most common form of circular flow model shows the circular flow of income between the household sector and the business sector.

A market for goods and services

A market for goods and services depends on the fact that consumers from households will purchase finished products from companies. The money will flow from the consumer household to the company in exchange for a finished product.

A market for factors of production

The thing about this model that it is not complete without bringing in the factors that makeup production. Without factoring in these factors to the model then firms should theoretically possess all the currency in the world and households would possess an endless supply of finished products. This is not the case and the things that makeup production must be included. These factors for production are detrimental to goods and services. In the factors market, both households and companies play a vastly different role. The roles almost reverse here as for instance household consumers are the labor force actually producing products. These laborers are then paid a wage by companies in exchange for their hard work in manufacturing finished products. In this case, the consumer households are considered the sellers and companies are the buyers. This is opposite to a market for products and services since in this case, the buyers are the companies, rather than household consumers.

A combination of goods and services

The model of the circular flow does not include the government. This closed-loop leads towards continued economic activity and prosperity. The fact that there is a lack of the government from within the chain results in a simplified circular flow model.

Although the base circular flow model does not include the government, it can, however, be extended for the inclusion of the government. The government can be added between household consumers and companies to impose taxes upon both parties. The government can also induce taxes on the factors of the production market to implement taxes the money that laborers earn.

The assumptions that must be made for this model

A large assumption when it comes to this model is that sectors are composed of a large number of consumers who will purchase finished products to fulfill their necessities and wants. The household consumers in this situation are the ones who have disposable income which society expects to spend money on these goods to satisfy their desires. In some cases, the assumption is made that households spend the entirety of funds on products and services.

Similarly, this model also includes the business sectors. The business sector is comprised of companies that produced products to match the market demand of consumers for certain goods and services.

Finally, the government also plays a critical role. The government has agencies ranging from the state level nationwide. They are responsible for passing legislation which entails the orderly function of the market. They are also responsible for the taxation of generated income.

Now you know exactly what the model of the circular flow is an how it contributes to society.

SOP – Standard Operating Procedures

by Fxigor

SOP meaning – What does SOP mean in business?

SOP or standard operating procedure is written, detailed, step-by-step instructions compiled by an organization to help workers carry out complex routine operations.

As you probably know that SOPs are nothing but some documented processes that are primarily used to deliver consistent quality every time. If you are a product owner or process owner, then it’s important to use SOPs so that your products and services provide quality and consistent value to its customers. When a company is in a growing phase, then the company owner mostly takes all important decisions. But, when the company has already reached its capacity, then the company owner can’t possibly take all the required decisions properly. That’s why the company should prepare documented SOPs so that the company can meticulously establish a proper succession plan and train its employee base accordingly.

Standard operating procedures are important to maintain the efficiency and safety for every department of a company/organization, such as strategic management, human resources, and payroll management, production and operations, employee training, sales and customer service, legal, financial, and information technology, etc.

Additionally note, SOPs should never be documented poorly and they should not be vaguely worded. Rather, the step-by-step instructions of SOPs need to be brief, crisp clear, and easy to understand. Additionally, standard operating procedures should be also simple to follow as well.

The SOP should be the key basis for every employee that’s working in an organization. Plus, standard operating procedures should be also used to training all new employees. On top of that, these instructions need to be updated on a frequent basis so that they are in line with the current needs of a company.

Reveal three key aspects of SOP

Standard operating procedures can possibly increase the value of any company (irrespective of its size and type).SOP follows a process-driven approach instead of a founder driven approach for its target customers.SOPs deliver consistent quality value to its customers.

What do you actually need SOPs or standard operating procedures?

i) SOPs save both money and time: If a company doesn’t follow a streamlined or standard operating procedure, then it will be too difficult to accomplish a specific task. For example, if the same task is getting performed by employees of an organization in many different ways, then it will surely take more time to complete. Thus, it will certainly ensure a time-consuming process. That’s why it’s important to follow SOPs so that the employees can accomplish their tasks in lesser time and money.

ii) SOPs improve communication and process flow: It has found in a recent survey that SOPs can excellently improve communication and process flows of a company and its organizations. Consider a situation, when an organization hires an employee. In that case, the employee must have the right idea about the processes and standards to be followed. That’s why the employees should follow SOPs as defined by the company for improved communications and expedited process flows.

iii) SOPs provide consistency: As already described before, the prime feature of SOPs is that they deliver consistent quality value to its target buyers or customers. Now, when a standard operating procedure is already in place, then the applicable business processes will automatically be followed in a correct and accurate way.

iv) SOPs ensure a safe and efficient work environment: As you probably know that it’s important to maintain a safe and efficient work environment in every organization. Now, when it comes to maintaining a safe and efficient work environment, it’s utmost important to follow the SOPs precisely. Otherwise, if the company doesn’t follow a standardized process, then it will be too chaotic. The assigned job responsibilities of the organization will not be fulfilled correctly. As a result, it will impact the work environment. In turn, the company won’t be able to deliver the right value to its customers in terms of its products and services and this situation can significantly hamper the company’s reputation.

So, being a business owner or company owner, are you planning to create your own standard operating procedure? If yes, then please follow the below sections to learn more about it.

i) Create a detailed list of business processes: First of all, it’s needed to find out and create a detailed list of business processes. This list can be reviewed by the managers; the managers can remove the redundancies and add any new points (if needed). Note, this list will act as the starting point when it comes to creating an SOP.

ii) Plan the right process: Once you have created the list, it’s time to plan for the right process. For example, whether the process will be written in the form of a workflow diagram or a step-by-step guide — this thing needs to be planned beforehand.

iii) Communicate with your employees: In the above steps, you have learned to create a detailed list of business processes and plan the process. Now, it’s time to speak with your employees as they need to understand and follow the process carefully.

iv) Write and review the process: Document the SOP instructions in a simple, clear, and detailed way so that it’s easy to follow by all. Also, you must review it at once.

v) Maintain the process: In order to make the SOP useful and relevant, it should be maintained properly. Additionally, you may need to update it from time-to-time basis so that it meets the current company needs and expectations.

In our trading industry, a lot of prop companies and trading corporate companies have SOP and all those procedures help that traders, analysts, managers work better in the ordered systems.

What does the circular flow model show

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