The liquidity on forex pairs may increase or decrease at a particular time but each currency pair can be traded at any time of the day. The spread of the currency pairs can widen or narrow due to a decrease and increase in liquidity respectively. However, the spreads can also be affected by the News Releases concerning the economy and capital markets. As mentioned earlier, the London session has the highest liquidity because many multinational banks have banks in England’s capital. Therefore, traders undergo a similar experience during the New York session. Besides this, the best timings also vary on the chosen currency and the currency pair.

When is the best time to trade forex?

All times mentioned will be expressed in Eastern Standard Time or EST. Dozens of economic releases happen each weekday across all timezones and currencies, but a trader does not need to keep track of them all. It is important to prioritize news releases between those that need to be watched versus less important ones.

Whether you’re trading stocks, forex, or cryptocurrencies each market has optimal hours when activity peaks and opportunities flourish. An important factor for liquidity in forex pairs is major market overlaps. The four major markets and exchanges are Japan (Tokyo), Australia (Sydney), Europe (London), and US (New York). Monday is generally considered a slow day for forex trading, as the market is still adjusting to news and events that may have occurred over the weekend. Additionally, many economic data releases are scheduled for later in the week, which can result in a lack of market-moving news on Monday. When it’s Monday morning in Australia, it’s still Sunday night in Europe, and European and US sessions are not open during this time.

In June, July and August, volatility slows down due to the summer season, making it a less popular time to trade forex. The reduced trading activity during summer results from the changing habits of large market movers. Different surveys show that summer months have the least returns, especially in the London session. Moreover, Consumer Price Index (CPI), consumer confidence, trade deficits, and consumer consumption are a few factors that have steady, scheduled releases and move the market. Traders can benefit by keeping track of news related to these forms of economic data. London session is the most suited for traders, and the latter should even consider London and New York sessions overlap.

The Forex market operates 24 hours a day, yet not all trading hours are equal. Most experienced forex traders try to limit their trading time to when the Best time of day to trade forex London session is happening. Monthly price movements from 1976 to 2019 of the U.S. dollar index and gold prices have a little positive association, measuring about 25.23% when compared using the correlation coefficient.

• Each session overlaps slightly with the next, which creates windows of high trading volume.
• The Act ensures that all investments are treated equitably and provides mechanisms for dispute resolution between investors and the state.
• This will allow you to get an impression of the platform and the current trading environment.
• The GDP data is released on a regular basis and the growth in the GDP can be compared between two nations to predict the price movement of a currency pair.
• Historical data suggests that the middle of the week, particularly Wednesday and Thursday, tend to see the highest levels of trading activity and volatility.

When to avoid Forex trading in South Africa

Following are the major events that a forex trader should look out for and comprehend their effect on the prices of currency pairs. The second and most explosive overlap happens in the morning for US traders (in the afternoon for European traders) from 8 am to 11 EST (1 pm GMT to 4 pm GMT). It is a small, but very active, window that some currency traders call the “hot zone”. This second overlap also coincides with the release of important economic numbers from two major global economies, the Eurozone and the US.

Australian Asian Overlap

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There will always be times of missed opportunities or jumps in price that will move against established positions when we are not around. This is a human limitation, and that is why in Forex it is advisable to choose the best time to trade based on one’s own available time and strategy logic. At the end of this article find out also when you should not trade. While you can technically trade any currency pair at any time during market hours, liquidity and volatility vary. Major currency pairs like EUR/USD, GBP/USD, and USD/JPY have the highest liquidity during their respective sessions.

Forex Trading Hours

Understanding these local factors, alongside global market trends, can provide a more comprehensive view of potential market movements, enabling more informed and strategic trading decisions. In respect of the best time to trade Forex, the majority (38%) of the traders stated that the best time to trade was between 6 am GMT (1 am EST) and 12 pm GMT (7 am EST). In turn, 31% of the traders stated that the best time for them to trade was between 6 pm GMT (1 pm EST) and 12 am GST (7 pm EST). TradingBrokers.com is for informational purposes only and not intended for distribution or use by any person where it would be contrary to local law or regulation. We do not provide financial advice, offer or make solicitation of any investments. Trading and investing in financial instruments comes with a high degree of risk and you can lose money.

Increased Volume and Volatility

When only one market is open, currency pairs tend to trade in much tighter ranges, compared to when two major forex markets overlap. EST, as this is the time when both markets on each side of the Atlantic are open. As a result, the market experiences a lot of trading activity and liquidity, making it a good time to trade for those who want to take advantage of the volatility and volume. Market overlaps create periods of enhanced liquidity, tighter spreads, and faster order execution. The London-New York overlap is particularly significant, offering the best trading conditions with increased volume and more volatile price movements. The most positive impact of increased liquidity for traders is the decrease in spread.

• Information presented by tastyfx should not be construed nor interpreted as financial advice.
• If you are a day trader, it makes sense to aim to trade during the most volatile periods.
• From a trading standpoint, this daily fix may see a flurry of trading in the market prior (generally 15 to 30 minutes) to the fixing time that abruptly disappears exactly at the fixing time.
• This leads to less exchange of currencies and causes liquidity issues for forex traders.

Best and Worst Times to Trade Forex: Discover the Optimal Results

Trading these pairs during their active sessions can result in tighter spreads and better execution. Trading during major economic news releases can lead to increased volatility and potential trading opportunities. However, it also carries higher risk due to sudden price movements and potential slippage.

Forex traders should always open any trading position with targets of take profit and stop loss limits. If the prices hit take profit limits the position is automatically closed. Entering the trade without a predefined target of profit is risky. Traders can use trailing stop-loss orders if they believe the price is expected to move further in profit.

The global Forex market functions through several major trading sessions. Each trading session has its unique characteristics, influenced by the opening hours of financial institutions in each geographical location. While the forex market is a 24 hours a day, 5 days a week market, there are certain situations when you should stay on the sideline. These include bank holiday hours, high impact news, important central bank meetings and illiquid market hours.

In this guide, we will outline exactly which sessions offer the most potential for profit, why market timing is important, and several key factors you should consider when planning your trading calendar. There are just two public holidays per year when the entire forex market is closed, which are Christmas Day (December 25th) and New Year’s Day (January 1st). Alicia is a seasoned day trader with 8+ years specializing in scalping. With a degree in computational finance, she leverages real-time charting, pattern recognition, and algorithmic indicators to capture micro-moves in high-volume stocks and forex. If any trends were established during the European session, we could see the trend continue, as U.S. traders decide to jump in and establish their positions after reading up what happened earlier in the day. The London-New York overlap is often considered the most significant and active period in the forex market.

By taking advantage of low spreads, traders need less movement in price to obtain profitability. However, despite the limited trading opportunities on Sundays, some traders still prefer to trade on this day. One reason for this is the potential for price gaps that may occur when the market opens. Price gaps occur when the opening price is significantly different from the closing price of the previous trading session, and they can offer opportunities for traders to profit. This day continues the high trading volumes and volatility seen on Tuesdays and Wednesdays. Traders must keep themselves informed about economic news releases from the United States, as they can lead to significant market movements throughout the day.