Best Time to Trade Forex

The forex market differs from the stock market in that it is open 24 hours a day, 5 days a week from Monday to Friday. However, it must be said that the volume of forex trading and the price movements will not typically be at the same level during these times. In other words, trading will sometimes be good, whereas there will also be times that one should avoid trading altogether.

The main reason for this is that there are specific days and even certain times of the day when there is a great deal of activity on the currency trading markets, and the best time to trade forex is when the foreign exchange markets are at their busiest. London is known to be the biggest trading market, although it is closely followed by the US market. Amongst the most popular forex currencies are the Euro, USD, GBP and CHF. However, even though the Euro is not the currency used in the UK, the busiest trading markets in the European Union, which happen to trade in Euros and the Swiss Franc (CHF), trade sessions within a few hours of London.

As mentioned, the US is the next most active market, and this will usually coincide with trading on the Canadian forex market. Therefore, the majority of forex trading will take place between the London and US sessions, and these are typically considered to be the best times to trade forex. London’s forex trading session will start at 8am universally coordinated time (UTC) and finish by 4pm UTC, and the major currencies that are generally involved in this session include the Euro (EUR), US dollar (USD), Brutish pound (GBP) and the Swiss Franc (CHF).

The US forex session in New York will start at 8am EST, which is 1pm UTC, and will finish at 5pm EST (10pm UTC). The most traded currencies during the US forex trading session are typically the USD, EUR, GBP, Australian dollar (AUD), Japanese yen (JPY), Canadian dollar (CAD), and the New Zealand dollar (NZD).

There are 3 hours on a daily basis where the London and US forex trading markets overlap, from 1pm UTC to 4pm UTC, and this is considered by many to be the best time to trade forex and to make the most profits. However, this is all based on the assumption that a person is trading in currency pairs that involve US dollars. With that said, there are completely different times that are considered as the best time to trade forex if a person is trading in currency pairs that does not involve the US dollar.

A prime example of this would be if a person decided to trade in AUD and JPY, they would find that the best time to trade would be during the Asian forex session. This is because the Australian and Japanese trading hours are very close to each other, thus allowing a trader ample opportunity to spot good trades throughout the day. However, it should be mentioned that the pairing of AUD and JPY is not recommended unless a person is an expert trader.

If a person is more interested in day trading then the forex trading times will be especially important to them, as they may typically like to let their orders run over a number of days, and therefore the busiest time of the day may not make much difference to them. However, there is also the opportunity to complete day trading by simply open and closing a trade within a few minutes of each other, and in this instance the busiest hours of trading will be the most profitable.

In summary, the 3 hours between 8am EST and 11am EST are the best times to trade forex, as there is the highest liquidity, the maximum number of trades and the currencies are known to shift far and fast. It must also be said that it is during this time period that the most significant financial news is released.

There are also certain days that are considered better than others to trade forex. A trader from the US, for example, will have 5 business days to trade, the market opens from Sunday and closes on Friday evening, but statistics show that the maximum number of trades generally happen on Tuesday and Wednesday, and therefore these are considered the best days to trade forex.

It is also advisable to not trade on Friday, as Fridays are considered to be extremely unpredictable. Sundays and holidays should also be avoided and there is typically very little movements in currency rates during these times.

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