|Dashboard Market Hours & ADR|
A good understanding of forex market hours is essential for trading. The image to the right is the dashboard market hours summary. It can be configured to hold up to 10 market sessions per day.
The forex (foreign exchange) market facilitates the sale and purchase of products between countries. There are also many speculators that purchase a currency and later sell it for a profit (or vice-versa). These transactions occur 24 hours a day, 7 days a week and typically transacted through large financial instituations eg banks. For the purpose of this discussion, we will refer to these types of trades as institutional trades and the traders as institutional traders. These guys typically deal in millions of dollars per trade and can trade any time of the day or night (including weekends). The volume traded on weekends is relatively small though.
The group of traders we belong to are called 'Retail' traders. We trade the spot market via brokers. Our brokers have trading platforms that typically allow trading from Sunday New York 5pm through to Friday New York 5pm. We know that trading is still occuring during the weekends (institutional traders) because our retail platforms have a Sunday 5pm open price that is different to the Friday 5pm close price. This usually shows up as a 'gap' on our price chart.
Knowing that the trading week (for retail traders) starts Sunday NY 5pm and ends Friday NY 5pm, we can divide the week into 5 equal 24 hr periods. Each 24 hr period will begin and end at NY 5pm. Each one of these 24 hr periods can be considered a trading day. Within each trading day, Instutional traders will be trading during the business hours of the country they live in. The business hours of any country could begin around 7-9am and finish around 4-6pm.
New Zealand is the first country in the world to start business for the day and (at the time of writing) New York is 17 hours later. The most trading volume is during Europe and USA business hours so people call these the European and USA sessions. Outside of Europe and USA are the business hours of the Asia-Pacific countries like Japan, New Zealand, Australia etc aka the Asian session. All three major sessions overlap with each other. It's generally understood that Asia has quite low trading volume and the overlap of Europe and USA is where the most forex volume is traded.
Before we move on, it's important for you to understand that there is no actual 'fixed' open and close time for each of the major market sessions except the close time for the USA session ie New York 5pm. If this is not clear, please re-read the last few paragraphs until you understand.
Because of the non-specific begin/end times of sessions, it's difficult to make software with market session data consistent across software vendors. For pipware.com indicators, we have chosen business hours of 8am to 5pm. You will later see that this isn't really too much of a problem as we are more interested in relative data rather than absolute data eg how many pips has this currency moved today compared to yesterday (relative) rather than how many pips have we moved today (absolute).
Asian Break Out
By default, the dashboard is setup with sessions that pipware.com staff personally use. Asian BO starts at 5pm NY and ends at 12 noon Hong Kong. The start and end times and the high and low are drawn on the main chart area (image right).
The high and low values of this session are projected through the rest of the trading day. These lines are very useful for support and resistance and often referred to as the Asian Break Out Box.
ADR - Average Daily Range
The 'daily range' is the number of pips that a currency moves in a 24 hour period. If the daily range is known for a number of days, an 'average daily range' can be calculated. Knowing the ADR for a currency is very useful when trading that currency. Placing trades that would rely on the daily range (today) to exceed the average is considered unwise.
Green arrow (image left) is pointing to the ADR values ie bottom row. Hedings are as follows MN=30 day average, WK=5 day average, YD=range eyesterday, TD=range today. Averages don't include weekends eg 5 day average is the last 5 'trading' days.
The other rows show range values for individual sessions. If one of the sessions eg Asian has a large abnormal range causing the daily range to exceed the 30 day ADR, London could be traded using the London 30 day average range as a reference.
Previous H1/H4 Candles
Whe viewing the M15 & M5 time frames, it can be useful to see the high and low of the previous H1 and H4 candle. Breaks of H1 and H4 candles are worth knowing about.
Change the colors using the settings shown to the left.
Sessions on the Dashboard
Let's set up the dashboard to display the three major sessions ie Asia, Europe and USA.
08:00 - 17:00 Asia
08:00 - 17:00 Europe
08:00 - 17:00 USA
Our first problem is that each session is a region containing cities of differing time zones eg Europe contains Frankfurt which is one hour ahead of London. We need to nominate a city in each region. Tokyo, London and New York are the generally accepted cities for trading.
08:00 - 17:00 Asia (Tokyo)
08:00 - 17:00 Europe (London)
08:00 - 17:00 USA (New York)
Now we will change all the 0800 - 1700 time values so they are relative to each other ie convert them to their UTC (GMT) equivalents. Note that UTC offsets (time zones) change with daylight saving. The values used here were current at the time of writing this page.
00:00 - 09:00 Asia (Tokyo UTC+08)
0800 - 1700 Europe (London UTC+00)
12:00 - 21:00 USA (New York UTC-04)
Spot the problem? The Asian session is starting at 00:00 and the USA session ends at 21:00 making for a 21 hour trading day. Most people compensate by adding 3 hours to the end of the USA session or subtracting 3 hrs from the start of the Asian session. We don't recommend adding 3 hrs to the end of the USA session. It definitely finishes at New York 5pm (see why above). So our 24 hour forex day can be accommodated by:
UTC+08 21:00 - 09:00 Asia (Tokyo UTC+08) ... Note that 3 hrs has been added to start ie Tokyo 05:00 - 17:00
UTC+00 0800 - 1700 Europe (London UTC+00)
UTC-04 12:00 - 21:00 USA (New York UTC-04)
The dashboard open/close times are shown in our broker time zone by default. The broker time in the example to the right is GMT+2 so NY 5pm is 23:00 on the MT4 charts.
Alternatively, you can show the open/close times in your own time zone. In the example to the right, the local time zone is GMT+13 so NY 5pm is 10:00 NZ time.
Use the ShowAsLocalTimes setting to switch between broker time and local time.
Generally, most people will use the default settings of the dashboard hours panel. When a session is affected by daylight saving, you can find updated settings in our forum. If you would like to customise the dashboard hours section for your own purposes, a manual is available that explains all settings.