The term “market timing” refers to the practise of transferring capital into or out of a market or between multiple asset classes on the basis of predicated future returns.
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If Kenyan investors have a solid feel of when market upswings and downswings are likely to occur, they can profit from speculating on them. Market timing is a core component of actively managed investment strategies and a cornerstone of trading in general.
Strategic decisions on whether to enter or leave a market may benefit from the use of fundamental, technical, quantitative, and economic information gleaned by forecasting models.
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When to trade Forex in Kenya
The forex market is available for trading 24 hours a day, five days a week. From Monday morning in Sydney to Friday afternoon in New York, it opens and moves around the world as markets open and close.
The market is available all week long, at all hours. However, the degree to which an asset is liquid at any given time will vary depending on its type.
Sydney, Tokyo, London, and New York are the major centres for foreign exchange trading. The foreign exchange market is segmented into trading sessions to accommodate the many time zones that participate in the market.
The hours of 7 am to 9 am and 4 pm to 6 pm are common for FX sessions. The Sydney session, for instance, takes place between the hours of 7 am and 4 pm local time, which translates to between 8 pm and 12 noon GMT and 11 am and 8 pm East African Time.
When it comes to trading hours, Kenyans are the most accommodating. Assume, for the sake of argument, that you do not participate in any trading during the London session, which begins at 11 a.m. local time.
If this is the case, your trading hours will be 4-8 pm local time, when the New York and London sessions meet.
Your success in the foreign exchange market depends on your familiarity with the forex trade clock. The market's activity can range from very fluid one day to very slow the next. Therefore, for Kenyans to choose the best time to trade, they need to take a number of factors into account.
The London and New York Session
Between 4 and 8 p.m. local time is when most Kenyan forex traders are active. London and New York's trade hours overlap at 4 p.m. GMT. The overlap lasts through midnight and is the market's most liquid phase.
Most brokers offer their tightest spreads at these times due to high levels of market liquidity. This is a great afternoon session, with the obvious exception of overlap with the day's two busiest sessions.
Most Kenyans arrive home from work or other activities around this time and may begin scrutinising the charts. This overlap period is characterised by the continuation of market patterns that emerged during the European session.
It's important to check the current market performance before making any investments to see whether there are any patterns or dominant market directions.
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The London Session
When it comes to foreign exchange trading in Kenya, the London session is typically the most active. As a result of the highest level of market liquidity—that is, the greatest number of buyers and sellers on the market—prices are more likely to react to news and events during the London session.
Foreign exchange (FX) trade activity is highest in the afternoon (London Currency Time). London's busyness can be explained by the fact that it serves as the world's financial capital. Since many international banks and financial institutions are headquartered in London, the city sees a great deal of foreign exchange trading.
Roughly 30% of all FX transactions occur during the London session. Changes of 80 pips or more were seen in most major currency pairs during this session. Depending on the time of year, the currency trading session in London begins in Kenya at roughly 10 or 11 am local time.
If you're in the foreign exchange market full-time, the London trading session is one of your busiest. Therefore, a full-time forex trader can originate and close deals in this period of time without working excessive hours.
Bonus tip: when to trade the EUR/USD in Kenya
The Euro to US Dollar exchange rate is the world's most actively traded currency pair. It is one of the most liquid currency pairs that can be traded and has some of the lowest spreads of any currency pair offered by forex brokers.
Between the hours of four and eight o'clock in the evening, local time, is the best window of opportunity to trade EUR/USD in Kenya.
These four hours are when traders in London and New York meet for a brief overlap in their respective currency trading operations.
Consequently, spreads are at their narrowest, and market volatility is at its maximum, during this period of strong trading activity because of the previous sentence's outcome.
This overlap session is favoured by a significant number of prosperous forex traders in Kenya, particularly scalpers and day traders. The time frame is perfect for identifying investment opportunities that have a good chance of being profitable.
Even while it could seem like a productive use of your time to spend the entire day in front of your computer searching for potential trading chances, it might be in your best interest to limit your time spent trading the EUR/USD to just a few hours.
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Even though the Foreign Exchange Market is open around the clock, it is unrealistic to expect Kenyans to be able to sit in front of their trading terminals nonstop without it having some sort of negative effect on their health, psyche, stress level, or exposure to risk, among other factors.
Therefore, it is best for Kenyan traders to come up with a trading plan in order to establish the times and the frequency of their transactions, and then they need to stick to it. This will ensure that they do not engage in haphazard trading or excessive trading.