The Forex market is open 24 hours a day, five days a week, to accommodate investors across the globe. Therefore, the Forex trading platforms allow the traders to trade at any time to move currency around, but that doesn’t mean that every time is the best time to trade in the Forex market.
Timing is everything in Forex trading since there are always good and not so good times to trade. This article aims to show you when to trade in the Forex market and when to stay clear of it to ensure that you are trading at the right times.
When is the best time to trade in the Forex market?
In the Afternoon on Monday
When it comes to trading, traders should avoid Monday mornings. But Monday afternoons are the best time to trade in the Forex market. The reason for this is that trading volume starts to increase as the market begins to heat up.
However, the Forex market won’t be at peak liquidity during this time, but it’s still worth looking at the market on Monday afternoon.
When there is overlap between multiple trading sessions
There is no doubt that London has the busiest trading session while New York does not lag far behind. In this case, traders expect the session overlap to be the most active period for trading with various opportunities.
The best time to trade in the Forex market for professional traders or those who trade full time is usually 14:00 GMT. It is when London is heading for closing, and many are waiting for New York to open.
Although, during this time, the price movements can be unpredictable. However, the large swings will provide greater opportunities for earning profit.
There is also an overlap between Tokyo and Sydney between 12:00 GMT and 07:00 GMT. While it is not as large as between London and New York, it is still the best time to trade in the Forex market.
At the times of high liquidity, such as Tuesday through Thursday
In the Forex market, activity increases during the afternoon on Mondays, but it reaches its peak liquidity usually on Tuesday at the earliest.
Generally, the Forex market is more active during mid-week, specifically from Tuesday morning to Thursday. So, when it comes to liquidity, traders should focus on trading in the middle of the week as it is the best time when trading activity is at its peak.
London session
Although each trading session has the potential of getting extremely busy, one trading session remains far more busiest and active than the rest of the trading sessions.
So, the London session also referred to as the European session, is considered the period when trading is at its peak. Approximately 30% of all trades are carried out during this time.
Bottom line
The traders should closely watch news releases and take advantage of market overlaps when planning their trading schedule. Profits can be maximized by trading during periods of greater volatility while keeping an eye on new economic data. As long as traders keep a balance between their schedules, they can ensure that trading opportunities won’t slip away when they sleep or take a few hours off.