Best time to trade forex: the real story of the forex market
The Forex market hours are open 24 hours every day of the week. However, markets are closed during weekends. Continuous trading is possible due to the fact that forex is traded throughout the world through centralized venues. The main question is still there what is the best time to trade forex?
The hours of the Forex market are split into four major trading hours: Sydney, Tokyo, London and New York. These are the four largest trading hubs, with 75 per cent of FX daily volume combined. It is available at 10:00 pm (UTC) on Sundays when the Sydney session begins – until 10 pm on Fridays, when the New York session closes for the weekend.
There’s always a forex session that is open, though there are downtimes when the market isn’t busy, typically at night between 7 and 10 pm, when New York is winding down before Sydney begins.
As you’ve probably heard, Forex trading is active and open 24/7 and seven days a week. The traders can sign up for the online trading system anytime to transfer currency. However, this doesn’t mean that traders must be trading around all day hours.
When trading in forex, the timing of the trade is usually important, as there are always occasions to trade at the right time and less-than-ideal moments to make trades. To ensure that you trade during the most optimal times, this article outlines the most optimal times to trade forex and the times that it’s best to stay out of the market. Also, check out the best forex trading platforms for beginners.
Best Times for Trade
Monday mornings could be the best time to avoid when trading; however Monday afternoons are an entirely different scenario. This is because the market begins to heat up, and the volume of trading increases. It’s not likely that the forex market will reach its peak liquidity in this period, but it’s worth looking at the market before Monday afternoon arrives.
If multiple trading sessions coincide
London is ranked as the busiest trading session in the world, with New York not being too far from the scene. Since this is the case, you’re likely to see the session time span as a busy time that offers ample trading opportunities. Many professional traders (or, at the very least, those who trade all day) typically believe that 14:00 GMT to be the best time to trade due to the time that London is coming to an end, and many are eagerly awaiting the transition into New York. Although price movements are unstable and unpredictable in this period, large swings can open the doors to more opportunities for gain.
There’s another similarity that occurs between Sydney and Tokyo, which occurs between 12:00 GMT between 12:00 GMT and 07:00 GMT; although it’s not as significant as New York or London, nevertheless, it’s an ideal moment to invest.
When there is a high level of liquidity (i.e. Tuesday to Thursday)
The market is definitely booming in the afternoons on Mondays, but the market for forex doesn’t reach the point of maximum liquidity until Tuesday, at most. It is noticeable during the middle of the week, particularly the Tuesday mornings and Thursday. If you’re looking for liquidity seeking, make sure to limit the majority of your trading to during the midweek because that’s when activity is at its peak.
Each trade session (or window) can become extremely busy; however, out of all the trading hours, one is busier than the rest. These London sessions (sometimes described as”the European session) are considered to be the peak times for trading at around 30% of all transactions occurring during these times.
The Worst Times to Trade
Early Monday/late Sunday
If you are looking at the most unfavourable timing to trade forex, there’s nothing more sleep-inducing than the crossover between late Sunday and early Monday. The market is slow and, in many ways, is a reassessment time, and many use it to make plans for the coming week instead of actively trading. Most traders avoid trading at the beginning of the new week, and it’s reasonable to suggest that you take the same approach.
Holidays in the country
The holidays of the year are not a choice; however, the time you enjoy during these holidays isn’t something you can convert into trading. Banks are among the largest influencers in the forex market, therefore their closing on holidays is an obvious indicator. When they’re closed and functioning, the amount of transactions executed is drastically diminished. This can result in the market being static or having erratic prices. It doesn’t conform to the usual pattern, and it’s recommended to stay clear of trading completely.