The Forex and the Stock Market
You achieve this objective if you take the time to learn about the three session system of Forex.
As you must be aware, Forex is a very active market which conducts business twenty-four hours a day from 5:00pm EST Sunday to 4:00pm EST Friday. You will find the task of monitoring this market persistently during this entire time very daunting. Consequently, the three session system was invented to assist you in defining those times that exhibit the most volatility.
However, you must understand that Forex is a global facility and that you would need to exert a maximum effort if you were to attempt to track just a few currency pairs constantly. The three session system enables you to solve such a problem by fundamentally dividing the trading day into sections that you can more easily handle.
The main idea is that if you can concentrate on three major trading zones then you will improve your ability to achieve consistent Forex profits. The three centers are the Tokyo, London and New York stock exchanges.
You must also realise that a strong connection exists between Forex and the Stock market. For example, if the Dow Jones index falls then so do currencies, such as the EURO and British pound that possess high interest rates. Alternatively, if the Stock market climbs, then the low-yielders, such as the USD and YEN, do too.
You should also realize that currencies exhibit increased volatility when the stock market are registering higher levels of activity. If you can master the ability to identify these correlations, then you will increase your chances of trading Forex profitably. You can accomplish this task by studying stock market movements because they could provide you with clues to the next Forex developments.
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