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Best Times to trade Forex in South Africa

Even though the forex market is a 24-hour market, it is not all the time that it is convenient or advisable to trade Forex. Wherever you are located, you have to know where it is convenient and appropriate to enter forex positions that can give you the potential for maximum profitability.

The world is divided into time zones, and every country is located within a time zone. For South Africa, the time zone is recorded as UTC + 2, which puts the country two hours ahead of the Coordinated Universal Time. The Coordinated Universal Time (UTC) is the time standard by which the various time zones in the world are regulated. It is not usually adjusted for daylight savings, which is the period when time changes of one hour occur to account for the changes in the position of the various parts of the earth relative to the sun as the earth undergoes revolution around the sun's orbit.

The South African Standard Time zone (SAST) refers to the time zones of South Africa, Lesotho, and Eswatini (formerly Swaziland). Daylight savings time is not observed by this time zone, so the forex trading hours and the best times to trade forex do not change in this zone. However, other countries do have daylight saving time, so it is important to keep

There are two distinct schools of thought in terms of considering the best times to trade forex in South Africa.

So what are the best times to trade forex in SA?

1.) Forex Trading Sessions Overlap

In terms of the forex hours of maximum trade potential, it has already been established that there are hours in which the greatest market volatility occurs. This is because the forex market has four established time zones, and there are periods when at least two time zones overlap. What makes the forex market a 24-hour market is that the market participants do their trading within the regular business hours of their time zones.

As a time zone takes over from the other, it makes for continuity of the business hours, making the market a 24-hour market. The time zones sometimes overlap, and the hours with the greatest market volatility are those found when the London Trading Time Zone overlaps the New York time zone. This overlap occurs between 8 am and 12 noon EST. Therefore, it would make sense to trade forex in South Africa during this time. A conversion to the South African Standard Time indicates that this occurs between 3 pm and 7 pm when Daylight Savings Time for the East Coast of the US is off, and 2 pm to 6 pm when Daylight Savings Time is on.

The Sydney and Tokyo trading time zone is from 2 am EST to 4 am EST. At this time, there is also some increased volatility, but this is not as high as for the London/New York overlap. This time zone corresponds to 9 am to 11 am, South African Standard Time.

Illustrative image of different time zones

2.) Timing of News Releases

Another school of thought dwells on the timing of the news on any given day. The news releases from South Africa that tend to move the market typically occur either in the active periods of the London session or just before the overlap of the London and New York trading sessions. A look at the emerging markets' economic calendar (which shows news releases from emerging market economies such as Russia, South Africa, Indonesia, China, Turkey, etc.) will provide some indication as to this fact.

Therefore, those who trade the news can also argue that these may be the best times to trade forex in South Africa. Some of the major market news such as Industrial Production, interest rate decisions, and employment data, fall within these trading hours. Let us look at the typical release times of some of the major news items that come from South Africa:

• Manufacturing production: Typically released at 12-noon SAST

• Mining production/gold production: 10.30 am SAST

• Consumer Price Index and Core CPI): 9 am SAST

• Retail Sales: 10 am SAST

• Interest rates: 2 pm SAST

A quick look at the times that the numbers for these economic indicators hit the market indicates that they fall either into the London-New York overlap period, or the Sydney-Tokyo overlap periods. This makes news from South Africa a very attractive proposition, and their release times one of the best times to trade forex in South Africa.

Preferred Currency Pairs to Trade

To participate in the best times to trade in South Africa, you can trade the pairing of the South African Rand with the US Dollar as well as the British Pound. Other pairs such as the major and minor currency pairs exist (EUR/USD, GBP/USD, etc). However, those looking for some local content with regards to what pairs to trade can still trade the USD/ZAR and GBP/ZAR at these times. A good thing about trading these two pairs is that the effect of any fundamentals that are at work can last for quite some time. This factor makes the trend movements of these pairs very strong.