When to Trade
Forex trades are carried out from different time zones all over the world so the market is open 24 hours a day. It gives traders the freedom to choose when to work. But is it truly active and profitable all the 24 hours? No! Quite often, beginners have misled by the fact that currency trading happens at all hours so they start trading in times when nothing happens as it should.
There are specific times when the activity and liquidity peaks and these special times are when the most active sessions overlap.
Why? Because during the overlapping of sessions, the flow of transactions and money is the highest.
The busiest session of all is the London (Europe) session. 30% of all trades happen during this session.
The best hours for trading are during the overlapping of the major session. The most important one: London/New York.
Note that during the last minutes of London’s session, the currency swings can become quite chaotic and thus harder to predict. The opening of London’s session is also very active and lucrative as it overlaps with the end of Tokyo’s session. The third major overlap happens between the Sydney and Tokyo sessions. Still, this time is less liquid than the London/NY sessions as it is late evening or night in the rest of the world.
(Most forex traders should trade during the late-US, Asian, or early-European trading sessions— essentially 2 pm to 6 am western Time (New York), which is 7 pm to 11 am UK time.)
The most active days
While there can be breaking news that disrupts the average weekly flow, there is a pattern that works most of the time.
The most active days are in the middle of the week, Tuesday, Wednesday and Fridays. Fridays are usually active only during the first half of the day. The last hours of Friday can sometimes be chaotic so it’s best to avoid trading then.
Businesses are coming back from the weekend so the week starts out in a slow pace; but it doesn’t mean you can’t trade on Mondays.