When is the best time to trade on forex?
This question becomes very important when a trader is looking for the best time where market conditions are good for profit.
Previously we have learned about forex trading hours into four market sessions, where each session has its own character.
From studying the market session we can actually determine the best time for forex trading.
But I think better if we study this chapter further, so we get the best time mapping to be clearer.
The best time for forex trading is when the market has the highest activity or volatility
The more crowded the forex market, the more crowded the transactions that occur there.
Then the greater the opportunity for us to make a profit.
But that does not mean that in the quiet market can not make a profit, it’s just that we get but is a small opportunity.
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Tokyo London Overlap
Overlap time is a meeting between two market openings so the market is so crowded, for example, the Tokyo market overlaps with the London market, which is between 02.00 pm and 04.00 pm.
Usually, during this overlapping session, the movement in the Asian session is quite thin.
But once the market is crowded, prices can move very fast.
So when European traders start to enter the market, liquidity becomes quite high.
This becomes boring when traders in Asia meet European traders and the market moves in a narrow range so that the market is less attractive to trade.
So the ideal time taken for trading is the next overlapping in the London and New York sessions.
London New York Overlap
This is the busiest time traders from the two world financial centers meet, London and New York.
Everyone starts to enter the market because they know that professionals will decide on the market movement today.
We can see that during this session, the market moves significantly, especially when news from America and Canada is released, so the market will move sharply because the news from Europe is released at the same time.
If the European session moves towards the middle of the price in this session traders from the US will continue the trend that was built before.
But the thing to watch out for is when traders from Europe close their transactions to simply pause or take profit so the market might move reverses direction.
Best days of the week to trade forex
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Previously we have learned that the busiest session is the London session, rather than the other session, and also overlaps London-New York which is the best time for forex trading.
Now we will learn about the best day for forex trading, all traders already know, that forex trading starts from Monday to Friday.
But do all days provide the same moving averages? If we pay attention to the answer is no, but the influence of the news also sometimes has an impact even on days that are usually less liquid.
By looking at the table above, you can conclude that the busiest day and often provide a high moving average is mid-week, between Tuesday to Thursday.
This is because in the middle of the week many people have already carried out trading actions because maybe on Monday there are still many who are waiting for the trend to be formed by the market.
While on Friday the movement will usually be active for half a day, which must be wary of is before the market closes, sometimes the movement of the trend is not easy to analyze based with technically.
This may be because nearing the close of the market many traders do close orders to avoid swaps, and this causes prices to fluctuate randomly.
But that is not an absolute condition
Sometimes even on Monday but it could be price movements with high liquidity because after all the conditions of foreign currency exchange.
Not only currency speculators but also large companies that conduct large transactions.
Time management in trading
read also Money Management Forex.
Although the forex market operates for 24 hours, it does not mean you also have to work for 24 hours straight.
As a human you need rest, get enough sleep, exercise, play with your children, etc.
As a professional trader, besides knowing about money management, also requires time management.
You can choose the best time for forex trading, and you also need to schedule your sleep time to replenish your energy so you can do your activities healthy.
As a trader, you also have to learn when to enter the market and when to wait without trading.
Not all conditions you are able to face easily to achieve profit, so with time management, in addition, to spend time when to trade, you can manage other activities so that they do not overlap with your trading time.
From the description above, now we will try to summarize, the best time for trading and the worst time for trading, this might be a reference for your management time.
Best time to trade in forex
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- The European session is the busiest and most crowded forex trading time, because many banks operate in this session, causing hand-to-hand money to turn around so easily, this is the best time to trade.
- When overlapping two sessions brings up the hours of forex trading with increased volatility and market liquidity. This presents an opportunity for you to immediately profit immediately, you can wait for overlapping hours, Tokyo-London, and overlapping hours London-New York.
- The most crowded forex trading is done in the middle of the week (Wednesday, Thursday, Friday).
You should check and follow the news before the trading time of your choice is opened, this will more or less give an idea of what steps you should take next when the target market has opened and you must choose a strategy.
The worst time to trade forex
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From the description above we can also make conclusions for the worst time to trade forex, which gives a less effective tendency to trade.
- Sunday, this is not possible for you to trade because there are very few weekends brokers open.
- Friday, liquidity declined after the New York session
- Holidays, on the day off many people are resting, causing the market to be less trading volume.
- At the time of the big news, price movements can be tempting, but you might encounter a whipsaw of confusing movements.
- When you are sick, your health condition is not prime, making you lose half your concentration, you better think about being healthy than thinking about the direction of the trend market.
Besides the worst time for forex trading, we can also draw other conclusions:
- For aggressive traders, the Asian session is not good due to low volatility and liquidity, price movements tend to be slow in this trading session.
- By the time the market will close soon (after the American market), some traders have stopped trading, so the market will usually be very low
Learning about trading hours in each forex market is not just to provide practical information about when you can trade according to the time zone.
This insight is also important for those of you who are doing transactions with a purpose.
For example, having a certain amount of profit benchmark you want to achieve before you decide to stop trading or have the amount of profit you want to withdraw from a certain market.
In addition, you can also determine the most appropriate strategy according to your transaction style.
When you decide to start trading forex, make sure you know immediately about the difference in trading time and opening and closing market hours.
Especially if you are targeting a particular market that you feel is more appropriate to your strategy and personal goals, such as wanting to trade on the Tokyo, Hong Kong, Sydney, or London.
Make good use of trading hours to launch your forex transactions wherever you are.