Time is Money

Whenever traders look at the chart they are always studying either price or some indicator value while ignoring what is in fact the most predictable variable of all -- time. As FX traders we are so conditioned to focus on price that we simply view time as background noise rather than as a critical component of daily movement.

On the most basic level time equals volatility. Almost everyone recognizes the fact that 90% of all price action occurs from 0400-2000 GMT when London and New York intersect -- and fully 65% of movement occurs in just four hours from 1100-1500 GMT when New York comes on line and European bourses close.

Isolating your day trading setups just to that time frame could radically improve your probability of success regardless of whether you trade momentum or mean reversion because the intensity of the moves are much greater, meaning your setups -- if they are accurate -- will stand a much better chance of making bigger money.

But time of day is just one of many ways that time influences trading in FX. Markets -- especially on a day trading level -- are a constant tug of war between long and shorts and understanding the inner workings of how supply and demand interact through time can provide you with better insight as to the near term direction of price.

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The old adage that trading is timing is true on many levels and if you start paying more attention to time and less to price you may discover that Time is Money.

Boris Schlossberg

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