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October 1, 2023

The Best Times to Trade Forex Markets

  • October 19, 2022
  • 4 min read
The Best Times to Trade Forex Markets

Many inexperienced forex traders immediately began trading. They obsessively follow different economic calendars and trade after releasing every data point. They see best time to trade forex is the 24-hour, five-day-a-week foreign currency market as a convenient way to trade all day. This approach not only swiftly depletes a trader’s resources but may also exhaust even the most tenacious trader. The forex market operates on the regular business hours of four distinct areas of the world and their respective time zones, unlike Wall Street, which follows normal business hours. As a result, trading takes place day and night.

What is the substitute for staying up all night? 

Traders will have a far better chance of generating earnings within a manageable timetable if they can understand the market hours and create reasonable goals. There are lot of best forex trading platform for beginners you can trade and earn money.

Ideal Moments to Trade

Morning of Monday

Regarding trading, Monday mornings may very well be a time to avoid, but Monday afternoons are a different story. This is due to the market warming up as trading volume rises. Again, you can’t anticipate a high forex market liquidity around this time, but it’s still worthwhile to check the market on Monday afternoon.

When several trading sessions conflict

The busiest trading session is in London, New York, not too far behind. Given this, you may anticipate that the session overlap will be a busy time with lots of trading opportunities. Since London is about to close and many people expect the transition to New York, many professional traders—or at least those who trade full-time—often believe that 14:00 GMT is the best time to enter the market. Although price fluctuations can be choppy and very unexpected at this time, there is more potential for profit because of the large swings.

While not as noticeable as London/New York, there is another overlap between Sydney and Tokyo between 12:00 and 07:00 GMT, which nevertheless shows to be an excellent period to trade.

When there is a lot of liquidity (i.e., Tuesday through Thursday)

Even though Monday evenings are when things tend to pick up, the FX market doesn’t achieve its peak liquidity until at least Tuesday. The middle of the week, notably Tuesday morning through Thursday, is when the currency market is most obviously active. Keep most of your trading restricted to the middle of the week, when trading activity is at its peak if liquidity is what you’re looking for.

Session in London

Although every trading session (or window) has the potential to become very busy, only one of the trading sessions consistently has a higher level of activity than the others. With over 30% of all deals occurring during these hours, the London sessions (also known as the European sessions) are renowned for being the times when trading is at its highest.

Trading Liquidity

In some financial markets, liquidity—the ability to locate a counterparty for every transaction—can be an issue, but not in the forex market. Although liquidity is not necessary when determining the ideal time of day to trade forex, it is still essential to know about it. Most retail traders work with a market-making broker who is constantly available and eager to fill orders.

The only time issues might arise in these circumstances is if the broker is having trouble processing orders on the Interbank. As demonstrated by the CHF move on January 15, 2015, when the Swiss National Bank lifted the Euro peg, a gap is a gap for everyone. Price gaps are so uncommon in the forex market, a true liquidity miracle, that it typically takes a new trader several months of trading before they witness one.

Forex volatility

The best forex trading platforms for beginners has a high forex votality. Volatility measures the potential strength of price movements at a specific time of day, and it differs significantly in the currency market for each pair and each hour of the day

Understanding volatility is essential for traders because most trading tactics don’t work well during times of high volatility. Market studies clearly show that even when all other factors are equal, changing a trading schedule by strategy-preferred fluctuations can mean the difference between huge losses and significant profits.

For instance, an oscillator-based trading strategy that targets ‘bounce offs’ from critical levels and is best suited to range markets will not gain much from level breakouts brought on by substantial volatility.