How? What is ‘or’? Trade Forex or what Trader currency pairs are often asked questions, but it’s also important to know When to trade…
In fact, Forex is a market that is open 24 hours a day, but all trading hours are not equal. In fact there are certain periods that are more active than others and the less active the market, the less opportunity there is.
Different Forex “Sessions”
A day can be divided in forex 3 semesters, depending on the opening of major financial centers around the world. These sessions are not official or clearly defined, since Forex is a market open 24 hours a day, but they are interesting points to know if and especially when to trade.
So we can identify the Tokyo session, the London session and the New York session and hold their approximate “schedules”:
*Tokyo Session: Midnight – 9am
*London Session: 8 am to 5 pm
*New York Session: 1pm-10pm
What is the best time of day to trade forex?
The first thing to notice is that the sessions sometimes overlap:
*London session and Tokyo session overlap from 8am to 9am
*London and New York sessions overlap from 1pm to 5pm.
These periods are therefore the periods when volumes are supposed to be at their maximum, since traders from different locations are active in the market at the same time.
Now let’s look at the average volatility of the major currency pairs for each of the three forex sessions:
Average volatility of currency pairs per session
So we note that the average volatility in all important currency pairs is maximum during the London session, which is explained by the fact that the London session is over 9 hours, with a duration of 5 hours (from 8 am to 9 pm and from 1 pm to 5 pm). Matches when two sessions overlap.
What are the best days of the week to trade forex?
A study of the volatility of major currency pairs and the table below concludes that the most active days of the week, on average, are Tuesday, Wednesday and Thursday:
This does not mean that trading on Mondays and Fridays should be avoided, but the opportunities will be less. Also, due to portfolio adjustments at the beginning of the week and profit taking at the end of the week, trading on Mondays and Fridays is often more difficult.
- You need to know how to choose currency pairs to trade session wise (for more details, see your study on volatility of different currency pairs).
- The most active times of the day are between 8am to 9am and 1pm to 5pm (overlapping sessions).
- The busiest days of the week are Tuesday, Wednesday and Thursday
Return to Lesson 5 | Go to lesson 7