What’s The Best Time to Trade in The Forex Markets?

Euro-USD pairing

Timing is everything in life, and that applies to financial markets too. Financial markets have always been popular with people because they promise excellent returns, provided you know what you’re doing. Traditionally, stocks were the financial market of choice for most people. Then, the internet came around, changing everything.

Forex trading has occurred for decades. The only difference is that previously it was limited to governments and institutional investors. Trading foreign currencies on the market wasn’t a viable option for most retail investors and traders. However, the internet’s advent proved a game-changer.  

As a result, forex trading has become incredibly popular. All you have to do is scroll through your social media, and you’ll be inundated with numerous advertisements for forex trading platforms, courses, etc. It seems like everyone has hopped on the forex trading gravy train.

Today, people gravitate to the forex market for several reasons. Firstly, forex is the world’s most liquid and valuable financial market. In addition, many people get lured into forex trading. They think it’s an easy way to make money quickly. Unfortunately, that’s not true.

Forex trading has also become extremely popular because the market is open round-the-clock. You can log onto a trading platform in the middle of the night and start trading. However, that doesn’t mean you should hop onto a trading platform at odd hours and trade because timing matters.

Understanding the Different Markets Operating Hours

You’ll want to start by learning about the operating hours of the four different markets. They include:

New York

The New York forex trading market operates between 8 AM and 5 PM EST. It’s also the second-largest forex platform globally, attracting numerous foreign investors because the US Dollar is involved in 90 percent of forex trades.

London

London’s forex market operates between 3 AM and Noon EST. The Pound is also a popular currency, and London is considered by many the trading capital of the world. According to the BIS, London accounts for nearly 43 percent of global forex trades. It’s also worth noting that many forex trends often originate in London – something technical traders should know.

Tokyo

Tokyo’s forex market operates between 7 PM and 4 AM EST. It was the first Asian trading center to open. As a result, it’s more popular than forex markets in Hong Kong and Singapore. The Japanese Yen is also one of the most popular currencies, often featuring in various trading pairs.

Sydney

Sydney’s forex market is the smallest of the four major forex markets. However, it’s also the first to open, operating between 5 PM and 2 AM EST.

The Best Time for Forex Trading

Naturally, you might be wondering about the best time for forex trading. Ideally, you’ll want to trade when there’s an overlap between open markets. Overlaps result in higher price ranges, creating more opportunities for traders. Let’s assess these overlaps in detail:

New York and London

The heaviest overlap occurs between the New York and London forex markets between 8 AM and Noon EST. Statistics show that approximately 70 percent of trades happen when these markets overlap because the US Dollar and the Euro are the two most popularly traded currencies. Volatility and trading volume are also high when these markets overlap, making it the ideal time to trade.

Sydney and Tokyo

The Sydney and Tokyo markets overlap between 2 AM and 4 AM EST. This overlap isn’t as volatile as the New York and London overlap. However, it still offers higher pip fluctuation. Consider trading the Euro and Yen during these times.

London and Tokyo

The London and Tokyo markets overlap between 3 AM and 4 AM EST. This overlap has the lowest action and trading volume. The small-time overlap also makes it difficult to identify profitable opportunities.

Various foreign currency notes

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A Comprehensive Guide About Decentralized Finance (DeFi)

Cryptocurrency tokens

Nobody expected the cryptocurrency sphere to blossom like it has today. When Bitcoin first arrived on the scene in 2009, most people shrugged it off as a fad. Few invested in the digital cryptocurrency from the get-go. However, those who studied Bitcoin’s White Paper knew that the currency would be a gamechanger. Today, the crypto sphere has expanded drastically. 2021 was a monumental year for cryptocurrencies. While 2022 has been disastrous as the crypto bubble burst, no signs indicate that cryptocurrency will go away soon.

While cryptocurrencies were envisioned as currencies people would use in the future, they’ve failed to actualize that vision. However, that doesn’t mean they don’t have their applications. The crypto and blockchain sphere has numerous projects and companies working on solutions with various use cases. You might have heard of some of them.

You’ve likely heard about decentralized finance if you’re even remotely interested in the crypto sphere. The Decentralized finance sector – commonly abbreviated as DeFi – is a niche within crypto that has gained significant steam in the past few years, and it continues to take the world by storm.   

Statistics show cumulative revenues on DeFi protocols exceeded $4.5 billion in March 2022. According to the IDC’s analysis, overall spending on decentralized networks skyrocketed from $1.7 billion in 2019 to $6.6 billion in 2021.

Reading about such statistics might have intrigued you to learn more about DeFi. If that’s the case, we’ve got you covered.

What is Decentralized Finance?

Decentralized finance is a growing niche within the crypto sphere. It originated as an alternative to traditional finance because the latter has numerous issues and complications. Traditional finance is highly centralized, requiring people to go through financial institutions to store, send, or receive money. These traditional establishments hold and control your assets. In addition, they have stringent regulations with high transaction fees. As a result, traditional finance has several hurdles users must overcome before completing transactions, making the entire process cumbersome, expensive, and time-consuming.

Decentralized finance eliminates financial intermediaries like banks and lenders from the process. It achieves this through smart contracts recorded over blockchain networks. Since there are intermediaries in DeFi, users save time and money while gaining control and autonomy over their assets.

DeFi Use-Cases

Understanding DeFi’s use cases can help you understand how it works better. Here are some DeFi use cases:

Lending Platforms

The DeFi ecosystem has become particularly popular for lending and borrowing activities. DeFi applications allow users to borrow funds while keeping their cryptocurrency holdings as collateral. Other options like staking have also become popular activities in the DeFi space.

Payments and Stablecoins

Switching from traditional to decentralized finance is challenging. You’ll still need to use decentralized finance to make payments. The difference is you’ll now be using your DeFi application or protocol instead of a commercial bank. Unfortunately, cryptocurrency isn’t a viable payment option because not everyone accepts it. In addition, crypto’s price volatility makes it unusable in some instances. As a result, stablecoins have emerged, bringing stability to the DeFi market. Stablecoins are generally pegged to a fiat currency – usually the US Dollar. As a result, they don’t suffer from price volatility, making them viable options for online payments, deposits, etc.

Cryptocurrency embl

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Trading Mentor is one of the best online mentoring platforms around. The website houses numerous online trading training courses, making it the best trading platform for beginners. You can rely on Trading Mentor if you’re looking for the perfect trading mentor to help you with your stock, forex, or crypto trades. Consider checking out our website today.

Here’s How Investors Can Profit from Bankrupt Companies

A bankruptcy petition

If there’s one word that traumatizes investors, it’s bankruptcy, and rightly so. Bankruptcies aren’t prominent, but they happen. You’ve probably heard of companies or individuals declaring bankruptcy. It’s not an ideal time because it means an individual or a company has reached financial insolvency. Most people try their best to avoid bankruptcy. However, what happens if you’re a shareholder in a company about to go belly up? Well, that’s not good.

It’s not uncommon for some organizations to file for bankruptcy after failing to pay their debts. For instance, the Administrative Office of the US Courts statistics shows that 13,160 companies declared bankruptcy in the 2022’s first quarter. This number decreased from the 14347 companies filing for bankruptcy in the fourth quarter of 2021, but it remains staggeringly high.

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How Do a Company’s Stocks Move During an Acquisition?

An acquisition deal

People often lump acquisitions and mergers together. However, they have numerous differences. For starters, acquisitions are more common in the business world than mergers. Mergers typically require two organizations of equal or near-equal size to join forces to form a single entity. Such situations are incredibly rare in the business world.

You’ll often see news articles mentioning companies merging. However, more often than not, one of these companies has acquired the smaller, less valuable one. There have been numerous acquisitions throughout history. The world’s largest acquisition, for instance, happened in 2000 when Vodafone Airtouch PLC took over Mannesmann for $183 billion. Today, that deal would be worth nearly $300 billion after adjusting for inflation.

Acquisitions inevitably affect a company’s stock. After all, acquisitions occur when one company purchases another organization. Since one company is purchasing another company’s stock to gain a controlling interest, it makes sense for both parties’ stock prices to feel the effects.

How a Company’s Stocks Move During an Acquisition

Here’s how a company’s stocks move during an acquisition:

Stock Price Volatility

It’s hard to prevent news from breaking out, particularly in today’s digital age. News reports about acquisitions – even rumors – are enough to cause volatility in the buying and targeted organization’s stock prices. Traders and investors try speculating on the deal. They try to establish how the deal affects their investing or trading strategy.

Likewise, they assess how much the buying organization will pay for the targeted company. Other factors for traders and investors to consider are whether the acquisition is friendly or hostile and whether an even bigger offer from a third party might occur.

The Target Company’s Stock Price

Generally, acquisitions cause the target company’s stock price to rise since the buying company is taking over by paying a premium. As a result, the target company’s stock will usually rise once news about an acquisition is afoot.

Eventually, information will also break out about the acquisition’s proposed price. The stock will usually converge at this price as traders and investors try to capitalize on a potential deal.

The Acquiring Company’s Stock Price

While most people expect the target company’s stock price to fluctuate during an acquisition, the buying company’s stock also feels the effect. This effect is usually more nuanced, depending on how shareholders and market traders view the acquisition deal for the company.

The buying company’s stock price will rise if shareholders and market traders consider the acquisition deal valuable. On the other hand, the company’s stock will decline if there’s uncertainty regarding a deal.

A good example of a buying company’s stock depreciating after the acquisition is the Microsoft-LinkedIn acquisition. Microsoft announced it would be acquiring the professional social networking website by paying a premium of over 50 percent of LinkedIn’s share price. Traders, investors, and shareholders reacted to the news negatively, forcing Microsoft’s stock to decrease by three percent.

Microsoft logo

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What Are the Effects of a Merger on Shareholders?

Businesses generally have numerous stakeholders, including employees, clients, suppliers, shareholders, etc. Shareholders typically vary depending on an organization’s size. Private corporations have fewer shareholders than publicly-listed ones since they can’t sell shares to the general public. On the other hand, it’s a different ball game with publicly-listed listed companies. These companies often have millions of outstanding shares, meaning theoretically, they can have millions of shareholders.

However, that’s not how the real world works because having so many shareholders would be impractical. Essential organization personnel, like C-suite executives and board of directors, will often hold most shares to retain control over a company’s decision-making.

Considering shareholders invest their hard-earned money into an organization, corporations try to please them at every turn.

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How AI is Changing Financial Markets

Artificial intelligence has been around for a long time. Scientists, researchers, and developers have worked on it since the 1950s. For decades, people thought artificial intelligence would never come to fruition. It seemed like a novel idea from a science-fiction movie. The field of artificial intelligence was founded at Dartmouth College in 1956, and it has come a long way since.

Artificial intelligence has grown exponentially over time. Today, artificial intelligence has become more prominent than ever. Artificial intelligence is prevalent in many industries, like the automobile sector. However, open your smartphone. You’ll find an artificial intelligence waiting to greet you. Siri, Google Assistant, and Alexa are prime examples of artificial intelligence. Although these artificial intelligence systems are prominent, they’re not robust AI systems. We’ll discuss the difference between weak and robust AI later in this post.

Artificial intelligence continues to grow exponentially. There are differing schools of thought about how AI will progress in the future. Some scientists believe the general public has a misconception about artificial intelligence because of media representation. Hence, they prefer using the term augmented intelligence. Likewise, some scientists believe that current iterations of artificial intelligence are weak. They argue that true artificial intelligence will be achieved once singularity occurs.

Regardless of the school of thought; you subscribe to, you can agree that artificial intelligence is ushering in a revolution for humanity. Its widespread adoption is visible in different fields. We’ll assess how artificial intelligence is affecting financial markets.

 A trader assessing financial market movements

What is Artificial Intelligence?

Artificial intelligence is the theory and development of computer systems. It aims to make computers capable of performing tasks that require human intelligence, like speech recognition, decision-making, visual perception, etc.  

AI has numerous components, including machine learning. Many people often confuse these terms as being the same or separate. However, the reality is that machine learning is a subset of artificial intelligence.

Generally, AI programming focuses on three primary skills. These include learning, reasoning, and self-correction.

  • Learning Processes: The learning processes aspect of AI programming focuses on collecting data and creating rules for converting the data into actionable information. These rules are known as algorithms. They provide computer systems and devices with directions on completing tasks.
  • Reasoning Processes: The reasoning process is another crucial aspect of AI programming. It helps computer systems and devices choose the correct algorithm to accomplish the desired outcome.
  • Self-correction Processes: The self-correction process is another vital aspect of AI programming. AI systems fine-tune algorithms themselves, ensuring they provide the most accurate results possible.
AI algorithm code

The Difference Between Weak and Strong AI

Differentiating between strong and weak AI might seem confusing to you. After all, what are strong and weak AIs? The answer is straightforward.

Weak AI is another name for narrow AI. These artificial intelligence systems are designed to perform a specific task. For instance, Siri and Google Assistant are excellent examples of weak AI. While weak AI can accomplish numerous tasks, they still operate within pre-defined functions set by the programmers. As a result, they’re not sentient, nor can they exhibit human intelligence.

On the flip side, strong Ai refers to machines or computer systems that can exhibit human intelligence. They’re self-evolving because strong AI can continue learning by itself without human intervention. The concept behind strong AI is to create an artificial intelligence system that mimics and even surpasses human intelligence. No strong AI currently exists. It’s highly unlikely we’ll see strong artificial intelligence manifest anytime soon. Otherwise, it would signal the start of the singularity.

AI trading

Artificial Intelligence in Cryptocurrency

Artificial intelligence is also playing an integral role in cryptocurrency. The cryptocurrency market has skyrocketed since its inception in 2009. Today, there are over 18,000 cryptocurrencies on the market. Cryptocurrency adoption continues growing rapidly, gaining pace every year. The past few years have been particularly monumental for cryptocurrencies. Crypto has emerged from its bubble and acquired mainstream attention. Cryptocurrencies like Bitcoin and Ethereum have become household names. An increasing number of traders and investors continue flocking in droves to purchase cryptocurrency because it holds immense potential to yield sizable returns.

A Bitcoin emblem

Statistics show the blockchain market was worth approximately $1.2 billion in 2018. By 2021, the market has expanded to $6.92 billion. Research shows the market will continue growing exponentially, reaching $162.84 by 2027.

Blockchain technology isn’t the only thing fueling cryptocurrency because other contributing variables also play a part. Smart contracts, decentralized finance, and NFTs are all playing their part, helping cryptocurrency adoption skyrocket.  

As the cryptocurrency market grows, new challenges arise. Artificial intelligence is playing a pivotal role in helping address these issues. Here’s how artificial intelligence is working in the crypto trading sphere:

Price Prediction and Forecasting

It’s no secret that various factors impact the value of cryptocurrencies like Bitcoin and Ethereum. Factors influencing cryptocurrencies’ value include market forces, investor sentiment, geopolitical stability, market volatility, supply chains, etc.

Unfortunately, these factors also mean that cryptocurrency is extremely volatile. Forecasting and price prediction are crucial for investors and traders in the crypto sphere. Fortunately, AI can be a saving grace for them. Various AI models can be used to predict price, making crypto trading and investing more sustainable in the future.

Automated Trading

Artificial intelligence can also help automated crypto trading. However, this isn’t something new because artificial intelligence has already been used for trading in other financial markets like stocks and forex.

Crypto trading has grown more popular than ever because of several reasons. The days of crypto being traded on the deep and dark web are long gone. Instead, notable institutions have integrated cryptocurrency into their operations. A prime example is PayPal. PayPal enables people to buy and sell four cryptocurrencies – including Bitcoin, Litecoin, and Ethereum – via their platform. Crypto trading has also skyrocketed because of non-fungible tokens (NFTs) receiving mainstream attention.

Automated trading is revolutionizing cryptocurrency trading. Traders can create AI trading bots to perform trading functions for them. Some trading bots are especially complicated. They can set stop-loss orders, react to market developments, and make trading decisions on the fly like normal human beings.

Automated trading can also help automatically trade cryptocurrency as part of investment portfolios, like stocks today.  

Risk-Prediction Volatility

It’s no secret that cryptocurrency is inherently volatile. A prime example of cryptocurrency’s volatility is Bitcoin’s price fluctuations in 2021. Bitcoin started the year at approximately $20,000. However, it quickly appreciated to $40,000 in January 2021. Bitcoin continued its bullish run, rising to $65,000 by April 2021. Eventually, it nosedived. April, May, and June were all rough months for Bitcoin as its value tanked week after week. Eventually, it was worth less than $30,000 by June end. However, it started to appreciate again in the second half of the year. Eventually, it crossed $60,000 again in November 2021. However, it didn’t stay there for long because it declined again.

As is evident from this example, cryptocurrencies are extremely volatile. Investors and traders cannot invest in them without risk because they never know where their investment might end.

Cryptocurrency is so volatile for several reasons. The space is unregulated, and cryptocurrencies are decentralized, meaning no governing body or authority can exercise control over it. In addition, cryptocurrencies are also still in their infancy. As a result, price discovery is ongoing. These factors make cryptocurrency extremely volatile. But these also render it an excellent investment for those with high-risk tolerance because the profit potential is enormous.

Artificial intelligence can prove extremely beneficial in helping traders and investors determine crypto volatility. Machine learning can observe past and present market data, like crypto prices. It can then predict price fluctuations in intervals as short as an hour.

Risk Prediction Compliance and Illicit Activity

Many experts believe the most notable way artificial intelligence will affect the cryptocurrency landscape is through compliance and regulation. Artificial intelligence has the power to ensure the ethical use of cryptocurrencies while limiting illicit activities using crypto.

People often have a misconception that cryptocurrencies promote illicit activities. However, that’s a misnomer. The reality is that all currencies represent economic activity, facilitating the transaction of goods and services. For instance, street dealers often accept the US Dollar for drugs. That doesn’t mean the US Dollar is boosting illicit activity. Instead, it shows that criminals will use any currency convenient for these transactions.

Cryptocurrency’s decentralized and unregulated state provides more leeway to criminals. In addition, it also affords them relatively more anonymity, making it a more attractive option for them.

Fortunately, introducing artificial intelligence can help curb these activities. AI can use transfer and federated learning to sort through publicly available data. Doing so enables AI to assess transactional risks. It can also flag suspicious activity from different transactors. Machine learning allows artificial intelligence to learn patterns and identify anomalies. AI could detect fraud, corruption, trafficking, money laundering, and other nefarious activities.

The involvement of artificial intelligence could have several benefits. Firstly, it could reduce an institution’s compliance and regulatory requirements. In addition, it also removes bad actors from the environment, making crypto trading and investing safer and more secure.

More importantly, AI can scour public information and de-anonymize criminals using cryptocurrency to stay under the radar.

Artificial Intelligence in Stock Markets

Artificial intelligence also has a crucial role to play in stock trading. Numerous instances of AI use already exist in the stock market. For instance, traders use automated trading bots to help them in their stock trading endeavors.

Traditionally, traders tracked stock prices and analyzed them against historical market data. This process was painstakingly long and inefficient, consuming too much time. Hence, the need for artificial intelligence grew more prominent than ever. Today, numerous automated trading programs exist that can capture market insights and data for you. These complex mathematical programs can crunch information for traders to use in their endeavors. AI systems can also notice patterns that most humans can’t. Some hedge funds today possess AI with machine learning abilities. These systems help them analyze more than 300 million data points within the first hour of NYSE’s daily trading.

However, AI technology isn’t only assisting traders with crunching data. Retail traders have AI systems that comb through various sources and knowledge bases to gather information. These systems use the collected data to predict future stock market movements.

Artificial Intelligence in Forex

Artificial intelligence is also playing a significant role in forex trading. Forex trading is inherently complex and risky. However, most traders use AI trading bots to reduce their failure risk. Statistics show approximately 90 percent of successful forex traders use AI trading programs to profit. Forex traders benefit from AI programs because they can analyze massive data piles, track real-time performance, streamline trading processes, etc. These insights are also invaluable for forex traders because they help them make more calculated trading decisions.

Another benefit of AI in forex trading revolves around predictive analytics. Predictive analytics refers to utilizing existing market data and algorithms to predict future market movements. It’s challenging for humans to analyze these massive data piles themselves, if not downright impossible. That’s where artificial intelligence thrives. AI software can forecast future market movements for traders, helping them rely on data-backed trading strategies.

Another overlooked advantage of AI in forex trading is eliminating emotional or panic trading. It’s natural for traders to panic sell or panic-buy when market conditions change. Likewise, a bad streak of trading decisions can also cause traders to abandon their trading plans and start making poor trading decisions. AI prevents this from happening because it provides meaningful information to traders.

Foreign currency

Learn More About Artificial Intelligence in Financial Markets with Trading Mentor

Trading Mentor is one of the best online mentoring platforms around. The website houses numerous online trading training courses, making it the best trading platform for beginners. If you’re looking for the perfect trading mentor to help you with your stock, forex, or crypto trades, you can rely on Trading Mentor. Consider checking out our website today.