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A to Z Academy / 1. Things investors must know before trading

3.Be familiar with trading rules and contract specifications

December 29, 2020 03:57

Having read the previous article, investors should have some understanding of the basics of financial markets in general. Here we will introduce some points that investors need to pay attention to when entering the market to help you trade more efficiently.

1.Trading time of each financial product

Even though the forex market trades 24 hours a day and opportunities are everywhere, the market closes at the end of each week, and the closing time varies from broker to broker. Other financial products, such as precious metals, usually have one hour period of closing time every day. In addition, products like CFD, stocks and stock indexes, are traded according to the local designated opening and closing time.

Typically, the financial markets are busiest during the overlapping hours of the London and New York markets, during which investors can enter if they want to take advantage of higher volatility. Also, different commodities can have unusual movements at certain times due to different fundamental factors. For example, the EIA crude oil inventory report released every Wednesday by the U.S. Energy Information Administration tends to have a big impact on oil prices, so investors can take advantage of such opportunities.

However, the impact of data on the market is not absolute, and all investments involve certain risks. Even if trading opportunities increase, whether the investor can make a profit still depends on investors’ interpretation ability and operating experience.


2.Conversion of winter and summer time

Western countries have Daylight Saving Time (DST), which moves the time forward by one hour in the summer, creating difference between winter and summer market times. In the United States, daylight saving time begins on the second Sunday in March and ends on the first Sunday in November. For the UK and the euro zone, it starts on the last Sunday of March and ends on the last Sunday of October.

The switch between summer and winter time, especially relative to some parts of Asia, can alter the timing of economic data releases and major meetings, as well as the official opening and closing times. Therefore, investors should pay attention to the DST change and adjust the time of trading to avoid unnecessary losses.

3.Accurately measure your profits and losses

Before investing, investors should first understand the size of their capital, and build an appropriately sized trading strategy. In addition, investors should also pay attention to the rules and regulations of margin trading offered by different brokers. There may be some differences, such as hedging policies, overnight interest, etc.

By understanding the details before trading, investors can measure the level of risk in advance and match with their own risk tolerance in the investment. The next step is to observe the volatility and fluctuation time of different products before trading, and understand the “pip value” of different products. In this way, the relevant profit and loss can be calculated when the prices move, so as to adjust the trading strategy.

Simply put, before entering the market, you should fully know what it would involve. If not, it means that the trading is not being “thought through thoroughly,” which can easily affect your trading approach afterward.

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5.Understanding the risks of investment correctly | ZFX


Risk Warning: The above content is for reference only and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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