Dubai opens numerous opportunities for traders. As the major financial center in the region, it allows trading in currency pairs, NFOs, derivatives, and other assets. This article reviews the Dubai time zone and how it impacts trading.
Dubai's main time is UTC+4 (four hours ahead of London). It means the closest one is the European session, but a trader can choose the best period individually.
How Does Forex Trading Work?
You have probably heard that the forex market works 24\5 because it is closed on weekends. Is this true? Yes, and no. Let us explain it in detail.
As with any other market, live people run a forex market. All main interactions occur when traders meet each other. Most of them work for large players, like national banks, insurance companies, financial funds, and others. These players work during the business hours in their time zone: they start working approximately at 9.00 a.m. and finish at 6.00 p.m. The schedule can be modified depending on the country.
If the main forex trading centers were distributed evenly within the different time zones, a forex market could work with the same power all the time. However, in real life, the distribution of world capitals and large financial centers creates active and low trading periods.
The Forex Markets Hours of Operation
There are three main trading sessions linked with the business hours in three regions: Asia, Europe, and North America. They can also be called by the names of capitals: Tokyo/Sydney session, London session, and New York session.
Three trading sessions partly overlap. For example, the end of the Asian trading session meets the beginning of trading in Europe. Another overlap window is the start of the New York (American) session in the afternoon in London.
The overlap windows are the periods of maximal trading activity, the highest volumes, and the highest volatility. The high trading volume is usually considered a good factor: it means high liquidity, so a trader can easily sell any currency. At the same time, high volatility means a high-risk level and a chance to lose money with the wrong trading deal.
What is the Best Time to Trade Forex in the UEA
Let us review the trading hours in the UAE and the possibilities behind them.
The Sydney session is not optimal for forex trading in the UAE. It lasts from 12 p.m. to 8 a.m. Dubai time. Besides, the Sydney session cannot show the high trading volumes: in general, only 4% of global trading volume is a Sydney share. So, the only reason to take part in this session is Australia's upcoming important economic news.
The Tokyo session starts 2 hours later (usually Sydney and Tokyo are united in one Asian session) is not much better for a trader in Dubai. The Tokyo session presents 6% of the global trading volume. It’s more than the Sydney session, but still not enough. Only the important regional news is worth the trader’s attention.
The London session starts at 11.00 a.m. Dubai time. It is a perfect time for active forex trading. The opening of a trading session is usually an active period because the market adapts to the night news and prepares for a new day. Then the trading volume goes down for some time, just until the New York session opens at 3 p.m. Dubai time.
The overlap window of the London and New York session is considered the most fruitful period in the forex market. European and American economies are the largest in the world. The most popular currency pairs are traded actively in this period. Also, the most important global economic, financial, and political news comes during this period.
So, the best time to trade on forex in the UAE starts at 11 a.m. local time and continues until the late evening.
How the Success of Forex Trading Depends on Time
Several time-dependent factors can impact the success of forex trading. Let us consider them one by one.
Trading Strategy and Trading Hours
At forex trading, the success can be different. For new traders, the great success is to close several trading orders and not lose their first deposit. More experienced traders usually set specific financial goals – to earn the amount of money for a week or month. Many traders create their trading diaries to set financial goals, record information about all orders, calculate the balance of profit and loss, and make some conclusions.
So, the success of forex trading is the achievement of the individual goal with various trading strategies. A trader can open middle-term and long-term orders along or against the trend and wait for the results.
Position and Swing Trading
Trading along the trend means a trader believes that the currency rate will go in the chosen direction for some time. It is also called position trading. Trading against the trend means a trader thinks the price will move in other directions very soon. So, the open order should wait for a trend reversal. This is swing trading.
The good news is that if you are a swing trader or position trader, you can trade anytime. Nor time zone, neither trading session can have an impact on your trading income. These two trading strategies can hardly be affected by the period of volatility.
However, if a trader prefers scalping trading, periods of high volatility are the best time to earn money. Scalping is a type of strategy when a trader opens very short positions with the hope of making a good deal after the next price jump.
So, if you prefer short positions and quick deals, you should choose the periods of high volatility on the market as the most potentially profitable period.
Time Zone
A forex market covers all time zones. Traders from any spot in the world can trade at any time, independently of the local time zone.
However, we advise you to focus on the individual trading activities during the trading hours close to your time zone. Thus, in the UAE the best time for trading is the London session.
Currency pair
If you prefer a particular currency to trade, you should stick with its native region. For example, if you trade USD/JPY, the best time for it is a Tokyo trading session.
Fortunately, a time zone in Dubai overlaps the European session and partly covers the New York Session. So, all the traders in the UAE can use the main currencies – USD, EUR, and GBP – at the best possible time.
High-Volume Forex Trading Hours Can Be Risky
Every trader should understand that forex trading is a risky business. It is very easy to make a wrong move and lose money, especially in marginal trading. So, it is necessary to evaluate the risk level beforehand and accept only the risks you can afford.
On forex, the risk level is directly proportional to the market volatility level. When the currency price jumps up and down every minute, it needs a great trading mastership to open and close orders fast enough before the next jump. However, having high trading skills, it is possible to make good money during the market volatility period using scalping.
Scalping is a method of forex trading when a trader opens very short orders. Not all brokerages allow scalping, and not all traders can make it with a profit. It is a risk that a profit from scalping trading cannot compensate for the spreads.
All the traders who do not want to stick with a trading terminal during the volatility period should choose the periods of moderate or low volatility. The periods of high volatility on the forex are usually occurring after important economic, financial, or political news. The opening hours, especially in London and New York, are also active periods.
Moderate and low volatility occurs in the last hours of the New York session or during Asian sessions if there is no important news. Also, the volatility is minimal before the holidays. However, at this time the trading volume is usually not enough for successful trading.
Conclusions
If you are a forex trader in the UAE, you can earn good money by trading with access to the forex market anytime except on the weekends.
The best time for forex trading in the UAE is the beginning of the London session and then the overlap window with the New York session. This period starts at 11.00 a.m. Dubai time, then the trading volume becomes lower to 1.00 p.m. and renews at 3.00 p.m. Dubai time when the trading session in New York begins.
However, be careful with the high volatility. It is a risky period because the price jumps up and down, and only a quick reaction can prevent the money loss. Never trade with money you cannot afford to lose.
by , 2022.07.13