One of the great things about trading forex is that the markets remain open 24/7. Somewhere, that is. As the market opens in one part of the world, it closes in another, but there is always a market open for trading. However, not all hours were created equally, and it is not profitable to trade during specific hours. Knowing how to trade, when to trade, which pairs, and where are all part of what sets novice forex traders apart from the more profitable and experienced traders. Here’s what you need to know to get started.
Trading Times in Forex
Basically, there are three time zones you need to know for trading. There is the London market, which opens at 3 am and closes at 11 am, the New York market, which opens at 7 am and closes at 4 pm, and the Japanese/Australian market, which opens at 7 pm and closes at 3 am. So you can basically trade 24/7 if you want to. But, keep in mind that there are fluctuations within each trading time zone, so movements are not consistent throughout each session. Watch the market and make your trades when the markets are the busiest. During downtimes, take a nap and come back when the markets are booming.
Choosing the Best Trading Sessions
For the best results, choose a period during which the opening times of two markets overlap one another so you can trade two markets simultaneously. When two markets are open at the same time, you should see a higher volume and more volatility. For instance, when both London and New York are open, there are loads of trading opportunities on top of the regular movements of prices. Using your own trading plan during these time segments can yield great profits.
Potential Pairs
During the periods of overlap, the currency pairs that are the most active are the USD/CHF, the GBP/USD, the USD/JPY, and the ERU/USD. The most profitable hours for those overlapping currency pairs are considered to be the 3 hours from 8 am until 11 am. This coincides with the times that various economic releases are published. Keep in mind that you’ll want to trade currency pairs at hours that the related markets are open.
Days to Take a Rest From Trading
Just as there are best hours and days to trade, there are also days that can be a total waste of time. Specifically, most traders go easy on Sunday trades. Nothing is moving with the currency rates on Sundays, so there’s not much to trade. The same is true on Fridays in the late afternoon. On Friday afternoons and holidays, the markets can be unpredictable and it’s best to avoid them.
Markets Around the Clock
With forex, everything is related. Besides looking at the ideal hours to trade, watch what’s going on around the world. If one currency pair makes a big move either up or down, it will affect all the other markets. Pay attention and make the best trades, no matter what hours and pairs you choose!
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