Price Action Guide – Part 10: Trading Strategy Per Currency Market Timezone

Currency markets are forever in a state of flux and rates of all currencies keep ticking up and down 24 hours.

Therefore, before applying a strategy to currency trading in India (where we are), it makes sense to figure out periods of activity and inactivity.

ACTIVITY IN THE GLOBAL CURRENCY MARKETS

About 70% of the trades happen when USA and Europe are open – after 7 PM India time. At this time India is closed (it is open between 9 AM and 5 PM).

25% of the trades happen when Asia (including India) and/or Europe are open.

5% of the trades are during inactive hours.

Therefore, if you are trading currencies in India, it makes sense to adopt different calculations in 2 timezones:

  1. When Asia and India markets are open
  2. When Europe and India markets are open

You also should take cues when

  1. Only Asia (minus India) is open
  2. Only USA (minus other centers, but including when Australia and Canada are open)

TRADING STRATEGY TO FOLLOW

Use this 15 minute candle strategy. But don’t use it for BTST, square up positions intra day.

BACKTESTING RESULTS

The backtest was conducted on 10 September 2018 (all timezones) and 11 September 2018 (Asia timezone). Here are the results:

1: India Currency Market Opens (Rest of Asia Major Markets are already open)

how to trade indian currency markets
Drew a Support and Resistance Line as per the strategy and immediately got a buy signal. As you can see it turned out to be profitable.

2: Europe Opens (India is already open while Rest of Asia Major Markets have closed)

trading usd inr when europe is open
After Europe opened, it kind of showed that all the $ euphoria generated by the Asian markets was hype. A sell signal was generated when the price broke down the support line and the price movements prove that the signal was profitable again.
At 5 PM the Indian market closed. The US market opened at around 7 PM India time.

3: USA Currency Market Opens (Asia including India are closed, Europe is open)

currency trading basics
Indian currency traders should pick up signals from the USA market for next day’s trading. per the strategy, They should draw the support and resistance. In this example, the INR depreciated to about 72.66 till close of USA trading hours.

4: Asia Currency Market Opens (India, USA and Europe are closed)

how to trade forex markets
You can see that between the time the USA markets closed, and Asia opened, there was random activity in the USDINR pair, which settled down at around USA close levels despite spikes up and down. When Asia opened, the USA close of 72.66 did not hold and the rate settled down at around 72.46. This was the cue for the Indian market to follow. Any movement now in the Indian market would now depend on the support and resistance lines of the first candle (repeat from Step 1 onwards).

That’s it. Try out this strategy on paper and check if it works. Remember that currency trading is not as risky as equity trading (1 lot of US/EUR is 1000 and the movement is not huge, unlike in stocks. Good luck.

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