While the Forex market is open 24 hours a day, five days a week, trading is not always active during this entire time. Profits are made in forex trading when traders are bidding on the prices and the market is active. So it is essential that you know the crucial hours and days of forex trading when traders are the most active.
As a global market, forex spans multiple time zones. As a result, there are three main forex trading sessions you should be aware of; the Tokyo (or Asian) session, the London (or Eurpoean) session and fi- nally the New York (or American) session.
The busiest times are when these ses- sions overlap, for example, in the early hours of the morning in London, the trad- ing session in Tokyo is just winding down. European traders are getting to their desks and analyse and digest information from the Asian trading session, so early 6am (GMT) is a great time to make trades as the saying goes, “the early bird gets the worm.”
The London session is usually the most active and in the afternoon overlaps with the opening of the New York or American session, so there can be good opportuni- ties to trade forex and make a profit.
Seasoned traders considered 10am (EST) to be the best time to trade forex markets as during this time, traders in London and Europe are preparing to close their positions and traders are getting ready to make a move in the American session. As the focus shifts from Europe to the US, this often cre- ates big swings in currency prices, opening up opportunities to profit.
The Best Time of the Week to Trade Forex
Research has found that the biggest movements in four of the major currency pairs - namely EUR/USD, GBP/USD, USD\JPY and USD/CHF - are observed on Tuesdays and Wednesdays. These days general- ly show the biggest movements in currencies as major data releases related to the economy are usually released on these days.
Fridays are busy as well, but only until 12am. During the second half of Friday, movements can often be unpredictable since major banks, hedge funds and financial institutions will close some of their positions for safety reasons over the weekend.
When NOT to Trade Forex?
- Bank Holidays
- Friday Afternoons and Weekends
- End of December
- When Angry or Frustrated
- Asian Sessions
- Release of News Events
- Market Closing Time
- Overnight
#Source : Forex For Beginner Traders.
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