When and what to trade Think about trading sessions!

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Best time of day to trade Forex

The Forex market is a specific financial market that trades over-the-counter. This means that there is no centralised exchange involved in the settlement of Forex transactions, like in the case of the stock market, and Forex market participants trade more or less directly with each other. There are certain benefits with over-the-counter markets such as Forex, including the ability to trade around the clock as the market doesn’t depend on the open market hours of a centralised exchange.

Most active Forex times

Even though the Forex market is open around the clock, not all trading hours are the same in terms of activity, volatility, and liquidity. Forex traders need to take this into account when placing their trades, as lower liquidity in the market can cause slippage and widen the transaction costs (spreads) of a currency pair.

Before we dig deeper into the best time of day to trade Forex, let’s take a look at how the Forex market operates.

The Forex market trades during Forex trading sessions, which are located in major financial centers around the world, including New York, London, Paris, Frankfurt, Moscow, Tokyo, Singapore, and Sydney. Out of these financial centers, four are considered as major trading centers for the Forex market, which are New York, London, Tokyo, and Sydney.

The open market hours for each trading session are shown in the following table:

Spring/summer times (March/April – October/November)

LOCAL TIME

EDT

BST (GMT+1)

Sydney Open – 7:00 AM

Sydney Close – 4:00 PM

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Tokyo Open – 9:00 AM

Tokyo Close – 6:00 PM

London Open – 8:00 AM

London Close – 4:00 PM

New York Open – 8:00 AM

New York Close – 5:00 PM

Fall/winter times (October/November – March/April)

LOCAL TIME

EST

GMT

Sydney Open – 7:00 AM

Sydney Close – 4:00 PM

Tokyo Open – 9:00 AM

Tokyo Close – 6:00 PM

London Open – 8:00 AM

London Close – 4:00 PM

New York Open – 8:00 AM

New York Close – 5:00 PM

As you can see, wherever you’re located, you can trade the Forex market around the clock during different Forex trading sessions. When the New York session is closed, the Asian session is open, and vice-versa.

However, not all trading sessions have the same characteristics. The London session is usually the most active session of all, given the large number of international banks located in London. Since the London and New York sessions overlap for a few hours each day, this NY-London overlap increases the liquidity of Forex pairs even more, which lowers transaction costs and adds to price movements in the market. Scalpers, for example, may find the New York-London overlap to be the best time to place their short-term trades.

The chart above shows the average volatility in pips for different currency pairs during major trading sessions. As you can see, the London session usually has the highest volatility.

Best days to trade Forex

Besides trading hours, Forex traders should also pay attention to their trading days. This is especially important for day traders, but becomes less important for longer-term traders such as swing and position traders. Day traders usually close their trades by the end of the trading day, or leave it open for a day or two, which makes the trading day an important consideration for day traders. Swing traders, on the other hand, hold their trades from a few days to a few weeks, which makes the entry timing relatively less important compared to scalpers and day traders.

Nevertheless, all market participants could benefit from trading during the market’s most active days. The Forex market is open Monday through Friday, and is closed on weekends. While Mondays and Fridays are usually slow, there can be significant movements on these days, especially if important market events happened over the weekend which may cause the market to open with a gap on Monday.

Similarly, many market participants who trade on a shorter-term close their trades on Friday, which could reverse the dominant trend during the week during late Friday trading due to these profit-taking activities.

Traders also need to follow a Forex calendar which lists important market releases during the week. Usually, Mondays and Fridays don’t have important releases (except the US non-farm payrolls which are released each first Friday of the month). Important central bank meetings also happen most of the time between Tuesday to Thursday.

What is the best time to trade Forex?

As you can see, the best time to trade Forex depends on your trading goals and trading style. Scalpers would find the best times to be those with increased market activity and liquidity, which lowers transaction costs. Day traders would like to trade on those days which offer the largest price swings, and be cautious when trading on Fridays since profit-taking activities can reverse familiar price directions.

Best hours to trade Forex

If we had to pick only one time of the day to trade the market, that would undoubtedly be the New York-London overlap, which starts at 1:00 PM GMT with the open of the New York session, and ends at 4:00 PM GMT with the close of the London session.

These trading hours have not only the highest liquidity, but also the highest volatility, as a lot of important market reports are released during these hours. For example, US reports are usually scheduled during the US mornings, which happens to be between 1:00 PM GMT and 4:00 PM GMT. Even though higher liquidity usually lowers price volatility, the sheer amount of buying and selling power during the New York-London overlap tends to cause large price swings every single day.

Currencies and trading sessions: what and when to trade

Another important aspect of Forex trading sessions is knowing which currencies to trade during which trading sessions. Again, this is important for scalpers and day traders, as they hold their trades for a relatively short period of time compared to swing and position traders.

In essence, currencies such as the Australian dollar and New Zealand dollar are less traded than other majors, such as the US dollar, euro, and British pound. The Sydney session, for example, could increase the liquidity for AUD pairs compared to other sessions. Bear in mind that the NY-London overlap can be used to trade any currency pair.

The European session, including centers such as London, Paris, and Frankfurt, offers the largest volatility not only for European currencies, but also for other major pairs and cross-pairs. The British pound vs Swiss franc pair – both European currencies – has the largest average volatility during the European session. However, this cross-pair is less liquid than other pairs, which magnifies its volatility.

Major pairs, which are pairs that consist of the US dollar and one of the remaining seven major currencies, are usually highly-traded during all Forex trading sessions. Bear in mind that the US dollar is the single most actively-traded currency on the market, with a market share of more than 80% of all Forex transactions.

Final words

Determining the best time to trade the Forex market is an important part of a trader’s trading strategy, especially for scalpers and day traders. There are many factors which influence the best hours to trade Forex: the currencies are you trading, your location, whether you are looking for lower transaction costs or higher volatility, whether you are a day trader or a swing trader, and so on.

The Forex market is an over-the-counter market which trades during Forex trading sessions, including the New York trading session, the London trading session, the Sydney trading session, and the Tokyo trading session. The Asian trading session actively trades Asian currencies, such as the Japanese yen, Australian dollar, and New Zealand dollar. However, bear in mind that the New York and London sessions actively trade all major currencies, not only the US dollar and European currencies.

Typically, many traders will find the New York-London overlap to be the best time of day to trade the Forex market. The New York-London overlap starts at 1:00 PM GMT with the open of the New York session, and ends at 4:00 PM GMT with the close of the London session. Since these two trading sessions are individually also the most active sessions out of the four major sessions, their overlap creates an extremely high number of orders which can both increase the price volatility, and reduce transaction costs.

What is The Best Time to Trade Forex

Best Time to Trade Forex

It is hard to say what the best time to trade FOREX is. There are common beliefs that will be discussed in this article. In the end, the most important factor for successful trading is discipline and following your own rules. Time is just one of the most important elements to consider when deciding on a trade. It should not be taken for granted, but treated with the respect it deserves. This article is about the best time to trade forex!

Introduction-Different Time Sessions

In the world of trading, there are quite a few important factors to pay attention to- time to trade forex is definitely one of them.

As you can see in the image above, trading forex takes time in 3 different major time sessions- Tokyo, London and New York. They will be revealed below. What is important to know is that each one has its own characteristics.

As longer-term traders, they should not really affect us, but if you are a shorter-term trader, you’d better be paying closer attention to them.

Let’s start exploring these time zones by the Tokyo Session first.

Tokyo Session

There are fifteen exchanges around the world trading forex. I am not sure if the Tokyo session is the best time to trade forex. For some traders it could be, but it really depends on the trading strategy.

The active trading hours for the Tokyo trading session are (in GMT):

The Tokyo session is well known to be a more quiet session. Surprises are never absent, but they will be more the exception than the confirmation of the rule.

Based on my experience and conversations with other traders, the best strategies to be utilised for a less volatile trading environment are:

Scalping is diametrically opposed to the way I trade. I do believe in longer-term trading, since it has proven to be a more reliable way of reading the markets through the years.

If you are scalping during the Tokyo session, you should bear in mind that smaller timeframes must be used. Having said that, I in no way want to advise you to do that, since I am myself staying away from that type of trading.

Tokyo’s trading session might not be the best time to trade for everyone. You should approach this session only if you have a proven trading strategy that works with it.

Below, I will give the average number of pips made during the Tokyo session for a few of the most traded FX pairs.

London Session

The next session down the clock is the London trading session. It is perceived by many to be the best time to trade forex.

One thing can be agreed with certainty- the London session is VOLATILE!

If you are starting trading just now, you need to be cautious with the London session, especially around the opening times, which is at 8 GMT.

The active trading hours are:

The usual type of strategies for the London session are breakout strategies. This is not coincidental.

The reason being- the increased volatility due to the large amount of market participants.

Fortunes have been made and lost during the London session.

Below, I will give the average number of pips made during the London session for a few of the most traded FX pairs.

New York Session

The New York trading session is probably the second best time to trade Forex. It is also extremely volatile, especially at open. If you are not experienced, you should stay away from the screens when New York opens.

The active trading hours are:

The usual type of trading strategies that day traders use during the New York session are reversal strategies. In extreme cases (20% of the time) they use continuation strategies.

Imagine that when London opens, the volatility of the market brings price high or low enough. Traders have already made money in the London session. So, what is left for the US traders if they want to make money and there are no major news?

Reverse the trade.

That is a typical scenario. If the first half of the day is bullish, the second part of the day is bearish (just like in the image above).

Of course, that is not the case every time. In strong bullish/bearish days, you will have a break around lunch time and when the americans “join the party”, the trend will resume.

One final thing is the average number of pips during the New York session. They are given below:

FOREX Trading Overlaps

Another very important factor when thinking about the best times to trade Forex is the trading overlap.

What is a trading overlap?

Trading overlap is the time period between two major trading sessions. In this sense, there are three trading overlaps.

Tokyo-London

The Tokyo-London overlap is probably not the best time to trade Forex. It is a pretty quiet period during which the momentum slowly builds up. Active traders are more attracted to the next overlap.

London-New York

The London-New York overlap is known to be possibly the most turbulent time of the day for traders. That is because traders from the two busiest trading centres start exchanging trades. Definitely not a newbie area and I highly recommend that you try to cut or minimise to a minimum trading around this overlap.

Best Days to Trade FOREX

It is hard to say which days are best to trade Forex. I can certainly say that usually Mondays are not as active as the rest of the week. On Monday, the markets are choosing a direction and it might not be the best time to trade Forex.

From Tuesday onwards is when the majority of reports start coming out and the momentum builds up.

Friday is another day that is typically not favourite amongst day traders. It is when the trading week finishes and a lot of traders are unwinding their trades.

That means that probably the best days to trade Forex are Tuesday, Wednesday and Thursday.

Not every week is the same as the next one, but this is more or less the rule that a lot of traders do follow when considering what is the best time to trade Forex.

Is It Necessary That I Trade During Those Times To Be Profitable?

There is nothing more misleading than the conception that you need to trade in a certain time or day to be profitable in trading Forex.

These are just general guidelines that will help you better understand the market structure.

As I am teaching in my trading course, there is nothing more important than self-discipline, trading plan and the right money management skills.

Therefore, the best time to trade Forex is when you feel ready. I have written an exclusive article on why it is important to trade less and take just the best trades.

Summing Up What Are The Best Times To Trade Forex

In the end of the day, it is not so much about the time or the day of the week. The best time to trade Forex is when you are strictly following your trading plan.

Also, the best time to trade Forex is when you are following your trading plan. You can’t go wrong with the right trading tools and the right money management skills.

As traders, it is important to know the general structure and what can be expected at certain times and days of the week. The rest is really up to the experience we gain as traders.

It takes time and routine, but with the right mindset you can achieve anything. You just need to find the right tools first and learn how to utilise them in your favour.

Nothing comes easy, but if you are persistent enough and are willing to learn, you can reach new heights in your trading career and learn what the best time to trade Forex is

p.s. In case you are interested to learn more about the way I trade on a professional level, you can check out my pro trading course HERE. If you have any questions, you can always address them to: [email protected]

If you are interested to learn more about other popular indicators, you can check them out here:

When To Trade Forex To Maximize Your Lifestyle & Profit?

One aspect I really enjoy about the Foreign Exchange (Forex) market is that it’s open 24 hours a day. It is only closed to most traders on the weekend. That means, you can literally place a trade at any time from Sunday 5:00pm EST to Friday 5:00pm EST.

That being said, a common question derives from that fact—what is the best time to trade Forex?

Let me answer that, but before, I want to remind you that this will apply mostly if you are an intraday trader (i.e. trading on time frames lower than 4-hour). Swing traders will usually take a look at the market throughout the day.

When To Trade Forex To Maximize Your Lifestyle & Profit?

The answer to the question above is fairly simple and vague: it depends.

I’ll try to guide you in your decision with two key elements. Those are your available time, and preference. Both of these aspects will strongly influence your decision regarding when to trade Forex.

By the end of this article, I want you to decide on a specific time and stick to it (unless you have a VERY strong reason to change).

Before going into those two elements, I want to give you a bit of background concerning market sessions.

I want you to think only about the major sessions above. I could have added several more, including Frankfurt, Paris and Toronto but the goal is to keep it simple. The time zone used for the above times is GMT for simplicity.

If you are a day trader, the ultimate mistake you could make consists trading in-between market sessions. Most often, the volatility is extremely reduced at that time. The most volatile periods occur when two market sessions overlap (London & New York from 12:00pm to 3:00pm GMT, or Sydney & Tokyo from 11:00pm to 6:00am GMT).

Market Session Hours Tip

Alright, so let’s get to what you need to consider and things you need to think about to decide when you’ll trade…

What time is available in your day?

The first basic question to ask yourself is this: “What time do I have available in my day to trade?”. The truth is, whatever the time you have available, you’ll find a way to trade.

Really write it down and map out your day.

If you want to day trade, you will need to focus on your screen for a period of time, meaning that if you work from 9:00am to 5:00pm, you can’t use that time as trading time.

If you want to enjoy a dinner with your family daily, then you can’t use that time to trade.

If, however, you watch Netflix from 7:00pm to 10:00pm, then you can cancel Netflix and use that time to trade.

If you are like most people, you’ll probably say “Well, I don’t have time to trade!”. I can tell that, for the majority of people, this isn’t true. If you are looking to be a more productive trader, take a look at The 7-Hour Forex Trader: A Guide On Managing Your Time and A Forex Trader’s Morning Routine: 5 Crucial Elements You Need To Apply.

Action step:

Take a piece of paper and make a schedule of your day. Block the time for the things you can’t change (work, school, family, commuting) and figure out where you are wasting your time, or usually have free time.

Next, I’ll guide you through deciding whether you can easily trade at the time you selected.

What is your preference?

When it comes to currency trading, market sessions are similar, but quite different at the same time.

The overlap between the London and New York sessions is like a war. There is a lot of movement, and usually some news coming out during that time. On the other hand, the Tokyo session appears more calm and trading signals are usually respected due to the low number of players in the market. Several institutions dominate the Tokyo session’s activity.

You want to think about the type of trade you are expecting to execute. For instance, a breakout trader might prefer to trade during the overlap of the New York and London sessions, where volatility will be at its highest point. That same trader could trade at the opening of the Tokyo session, since it overlaps with Sydney’s session. He probably wouldn’t be successful trading breakouts late in the New York session as volatility will be low and the probability of fake breakouts will increase.

The other thing to think about is that the Forex market isn’t moving in the same way during all sessions.

A typical 24 hours

Sidney’s session is usually very calm. Then, there is a spike in the volume transacted once Tokyo’s session starts. This session, however, is still fairly calm compared to what’s ahead. In my experience, trade signals are slightly more reliable during the Tokyo session.

Then, volatility usually increases during London’s sessions, where breakouts and strong reversals are more frequent.

This is followed by the, usually, highest volatility of the day once New York’s session starts. The cycle finishes with the second half of New York’s session where the activity is usually low.

There are various exceptions to the 24-hour period described above. News will often impact the market’s volatility strongly. The Tokyo session could be very volatile, especially if a news release occurs.

My personal take

I thought I’d finish the article by offering you my personal take on when to trade Forex. I have been exploring a lot. While starting as a swing trader, I didn’t really think about the idea of market sessions. I would simply take a look at several charts at the close of the 4-hour and daily candles. That was it.

However, as I started to dive into day trading. I have been paying more attention on how to allocate my time.

I have two favorite time spots to trade Forex on an intraday basis. The first one is at the beginning of the New York session (say from 7:30am to 12:00am EST). At the time of writing this article, I am still developing my strategy for this session.

My second spot is the very beginning of Tokyo’s session (from 7:00pm to 8:30pm EST). This is a period where I can benefit from a sudden increase in volatility, usually caused by an increase in institutional trading.

Let’s recap

In the end, it all comes down to what you prefer. Your time zone might restrict you on the market sessions you are going to trade in. The good thing is that you do not have to stay up late at night because there’s always activity in the Foreign Exchange market.

Think about the type of trade you prefer and ask yourself whether it is possible for you to take those trades during a certain session. Once you have selected a market session for which you are available to trade, make sure you test your strategy specifically on that session and set a routine to be at your computer daily to trade. You do not need to trade a whole session. Sometimes around 2 hours of trading is enough. You, most importantly, need to be consistent with what you do.

What session do you primarily trade? Comment below and let others know how you decided on that!

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