How can there be the best time to trade? If you are a newcomer and haven’t ever participated in the trading market, you may have asked the same question after reading the title of this article.
It’s nothing to wonder, though. Like all the marketplaces, what makes the best time to trade in the Forex market is its availability ratio of the sellers and buyers.
Best Times and Days to Trade in the Forex Market
One may think that these favorable trading times are the overlapped time period between two different sessions. Well, when the concept behind it is true, there is more to it. Let’s find out how much.
1. Tokyo and the London Sessions
During this period, liquidity seems to be pretty low. The reason behind this is the lunchtime drained the energy of the Asians. When the time hits the afternoon, people’s attachment to trading activities slows down.
Those who are involved in futures trading, always try to trade during the overlapping session and take advantage of the market volatility.
Europeans are just preparing for their daily office works, and with the liquidity at its least, earning becomes barely possible.
A prudent trader should either take a day nap or break from the tedious workload of trading to gain energy for more active time or join another one like the London or US session.
2. London and the US Sessions
The most optimum time to get the most liquidity volume is around 10:00 am to 03:00 pm in London, and around 10:00 am in NY.
Do you get the idea? Do you realize the importance of that overlapping time around 10:00am in the London and US session?
Theoretically and demonstratively, this overlap is the busiest among all the available market sessions. The most powerful and influential economy in the world is literally fighting for some control over the market.
Some of the most profitable or defeating moves appear at this session. The moves are even more frequent when important news is about to be released from Canada and the US region. Other than that, the market gets hit by the late release from Europe.
Trends created from the European session often continue for the US traders’ direct joining and catching the momentum and taking it forward from there. Still, traders should be aware of sudden twists possibly can occur out of European traders’ tendency to close some of their positions around the US lunch period.
Favorable Days to trade
If a trader ever looks at the chart of the median pip range for all the major pairs for all the days of the week, he may realize that the most optimum days to trade are the middle ones of the week. Through this time range, the market gets the most active, and buyers and sellers overpopulate the industry.
Fridays tend to be a little busier until EST 12:00pm. The market starts to dilute at a rapid rate, and the dilution continues until its complete termination at EST 5:00 pm. Estimating the overall scope, we only trade for half the day on an average Friday.
Though professional traders remain engaged with the market through all the weekdays, knowing the best days to trade will eventually result in earning more profit. How? When you know the best hours to trade, you also know when not to engage in trading. You can take rest and save energy during comparatively low liquid sessions just to give extra effort during active hours.
There will be situations when traders should not engage in trading as it is seemingly not profitable, for example on Sundays, Fridays, during major news events and holidays. Once a trader develops a sense of the best and the worst sessions to trade in, they should manage their schedules to make the most of their time.