Best and Worst Times to Trade Forex
The forex market is open for business on all seven days of the week. This implies that traders can transfer money by logging into their preferred trading platform. Despite this 24/7 availability, it’s not wise to trade around the clock without a strategy in mind.
The right timing can make all the difference in forex trading. Both ideal and unfavorable times to trade. Let’s examine the optimal times to trade forex and the optimal times to avoid the market.
What are the operation forex market hours?
The Tokyo Stock Exchange is operational from 9 to 11:30 am and from 12:30 to 3 pm, Monday through Friday. Japan Standard Time (GMT+9) is equivalent to 12–2:30 and 3:30–6 in the morning in London Time. (GMT).
Traders should remember to pay careful attention to any breaking news published at this time because significant economic releases in Japan typically occur between 9:30 pm and 3 am. Greenwich Mean Time. Before the European market opens, this can help them take advantage of price movements.
The Sydney Stock Exchange is open from 10:15 am to 4:15 pm, Australian Eastern Daylight Time (GMT+11) or from 11:15 pm to 5:15 am, GMT, Monday through Friday. The Sydney Stock Exchange does not shut for lunch as the Tokyo Stock Exchange does. Additionally, it doesn’t provide opportunities for pre-market or after-hours trading.
The London Stock Exchange is open daily from 8 am to noon and from 12:02 to 4:30 pm GMT.
Similar to the Tokyo Stock Exchange, the London Stock Exchange offers eight hours and 28 minutes of busy trading time, some of the longest on the globe.
From 5:05 to 7:50 am and from 4:40 to 5:15 pm GMT, the London Stock Exchange also offers extended trading hours.
Are there overlaps in forex trading times?
The US and London markets overlap from 8 am to noon EST or 1 to 5 pm GMT. The greatest trading volume and best trading opportunities occur during this four-hour overlap.
The Sydney and Tokyo markets overlap from 2–4 am EST or 7 am to 9 am GMT. Although this two-hour time frame is less liquid than the US and London overlap, it still offers plenty of opportunities for experienced traders.
Between 9 and 10 am GMT, the London and Tokyo forex markets overlap. Due to the brief time frame and the fact that most traders in the United States are asleep, this hour-long overlap experiences little trading activity.
Best times to trade forex
Regarding the ideal times to trade forex, Monday mornings are not one of them. Monday evenings, however, are a completely different situation. This is due to a rise in trade volume as the market warms up after the early hours. Again, you can’t anticipate a surge in forex market liquidity during this period, but checking the market on Monday afternoon is worthwhile.
When Multiple Trading Sessions Overlap
The busiest trading session is in London, with New York not far behind. Because of this, you can anticipate that the session overlap will be an active time with lots of trading opportunities. Professional traders often consider 14:00 GMT the ideal time to join the market since London is drawing to a close and many are awaiting the move to New York. The large changes in price create more profit opportunities, even though price movements can be choppy and unpredictably unpredictable at this time.
Between 12:00 and 7:00 GMT, there is yet another overlap between Sydney and Tokyo. Even though it’s not as noticeable as London/New York, now is still a good time to trade.
During Times of High Liquidity (Tuesday through Thursday)
Monday evenings see an increase in trading volume, but the forex market doesn’t hit its peak liquidity until at least Tuesday. Specifically, from Tuesday morning through Thursday, the forex market is most noticeably busy in the middle of the week. Keep the bulk of your trading restricted to mid-week if you’re searching for liquidity.
Although every trading session or window can become extremely busy, only one of the trading sessions consistently experiences higher-than-average traffic. With approximately 30% of all trades occurring during these time frames, the London sessions (also known as the European sessions) are called for being the moments when trading is at its peak.
Worst times to trade forex
Late Sunday/Early Monday
One of the worst times to buy forex is late Sunday through early Monday. Everything continues to move slowly at this moment. In many ways, this time frame serves as a reassessment period, and many people use the crossover to make plans for the coming week instead of actively trading. It makes sense to take the lead of the larger proportion of investors who refrain from making trades as the new week dawns.
Resist the temptation to participate in the forex market during national holidays because they provide relaxation. Because banks are one of the largest influencers on the forex market, their closure during holidays dramatically affects the market. The volume of forex transactions declines when they are closed and not in operation. This may lead to erratic price behavior or a stagnant market. On national holidays, it is best to stay away from trading altogether.
During Major News Releases
Financial reports, Economic data, and Political developments drive the forex market. Unless you understand how to trade the news, avoiding wanting to trade during significant news events is best.
In particular, when news occurs suddenly, updates, data, and reports can have an unpredictable effect on the forex market. Utilize a forex economic calendar to keep track of significant news releases so you can anticipate future events. The following news-related events may affect the forex market:
- CPI data
- Trade deficits
- Consumer consumption
- Unemployment rate
During Times of Strange Price Action
Sometimes, a forex pair exhibits strange price behavior for no apparent rhyme or reason. Random movements may excite the market, but they typically produce a volatile trading environment. Understanding the factors behind such price shifts and the market’s mood can be extremely challenging. For this reason, it is best to wait out the storm until it passes when strange price action occurs.
Asian Sessions When Liquidity Is Lower, Particularly Near End-of-Day Crossover Time
Low liquidity levels, which plague Asian sessions, are a red flag for the right reasons. Since frequently few resources are traded during Asian market sessions, the average pip movements are too small to cover the wide spreads on Asian currencies. This is especially true right before the day’s end rollover.