Forex Trading Sessions: What's the best time to trade?
News | November 11, 2022, 10:20 AM | The content is supplied by a Guest author
Is there a best time to trade forex? This question is often asked by traders, and the answer is not always clear. The truth is that there is no one ‘’best’’ time to trade Forex since each trader has different preferences and goals.
In order to make a choice you should get acquainted with the forex trading sessions, time-zones. You can easily answer the question ‘’What time does the forex market open?’’, but what time is convenient for you? Let’s figure it out now.
How does Forex market work?
Forex is an enormous and the most liquid financial market in the world. Transactions in the Forex market are based on pairs of currencies, with each transaction involving the simultaneous purchase of one currency and the sale of another. The trading processes are carried out via a broker as a rule - it is a provider of all the necessary stuff. Check out the FXCC review and start trading with a reliable broker.
The value of a currency pair is determined by the relative strength of the 2 economies involved, as well as by factors such as interest rates, inflation, and political stability.
Because the Forex market is open 24 hours a day and trade can occur between any 2 currencies, it is possible for traders to take advantage of opportunities as they arise. For example, if one currency is strengthening while another is weakening, a trader may choose to buy the stronger currency and sell the weaker one in order to profit from the difference in their values.
Forex Market Hours
Everybody knows that time is money, especially in the Forex market. It is open 24 hours a day during weekdays, but this doesn’t mean you should trade at any time or all day long - volatility varies during different times of the day because of different trading sessions.
To establish the best times to trade and find out which forex assets are most profitable to trade, you have to understand the various trading sessions in Forex. Let’s take a closer look at each session.
The New York Exchange is the second largest forex platform in the world, and because of this, it is closely watched by foreign investors. The US dollar accounts for 90% of all trades on this exchange, so movements here can have a powerful effect on the dollar's value. When businesses merge or complete acquisitions, the dollar can either gain or lose value instantly as a result.
The New York Forex session is available from 8 a.m to 5 p.m.
Japan is the first Asian trading center to open and takes in the largest bulk of Asia's trading. The currency pairs that typically have a fair amount of action are GBP/USD (British pound vs U.S Dollar), USD/JPY (U.S. dollar vs Japanese yen), and GBP/JPY (British pound vs Japanese yen). The time you can trade on this market is from 7 p.m to 4 a.m
Sydney, Australia is where the trading day begins. The trading session starts at 5 p.m and is available till 2 a.m.
It is considered one of the mega-markets and sees a lot of initial action on Sunday afternoon when traders are trying to regroup after the long pause since Friday afternoon.
London is the central trading capital of the world, accounting for roughly 43% of global trading. It also has a big impact on currency fluctuations because Britain's central bank is headquartered in London. Forex trends often originate in London as well, which can be great news for technical traders who use statistical trends and momentum to identify opportunities. The London session starts from 3 a.m to noon.
The best time to trade
Although everything is individual, there are certain times considered the best for trading:
- Monday afternoon
- High liquidity times
- Multiple trading sessions overlap
The worst time to trade
And here are the worst time you should take into account as well:
- National holidays
- During times of major news
- Strange price actions
Each trader is different and will have different times that work for them. The best thing you can do is test out trading times and see what works best for you. Put your new skills into practice and see TMGM broker review. Then, find the time that fits your schedule and start trading.