Best Forex Trading Time

Avatar Paladino
August 31, 2022

One of the attractive features of the forex market is that it operates 24*7 and can be conducted in several time zones simultaneously. You know trading is open round the clock but naturally comes to the question of what time, day or week is more profitable. If you are able to understand the market hours well, it becomes easy for you to determine the best time to trade in the forex market.

Time is Considered the Best Friend of a Forex Trader:

The trading sessions of the forex market are divided into four parts that follow from Monday to Friday, with a break on Saturday and Sunday (weekend). All the trading sessions last for nine hours except in the European market, where the trading sessions are of eight hours. Here are the four trading sessions prevalent in the forex market:

  • Pacific from 22:00 to 7:00 UTC
  • European from 8:00 to 17:00 UTC
  • Asian from 23:00 to 9:00 UTC
  • American from 13:00 to 22:00 UTC

One thing you must consider here is that there is a period where trading is conducted at the same time in two sessions. This is known as the intersection of trading sessions. When there is simultaneous trading in two sessions, it is observed that there is high volatility in the forex market. This intersection of trading sessions is the time when the market is the most liquid and therefore is the best time for a trader to make profits. Interestingly, the highest volatility is seen when the London and NY trading sessions intersect because both Euro and Dollar are the most influential currencies in the world. This interaction takes place between 13:00 to 17:00 UTC, and the trader can make the best out of these five hours.

What Are the Best Months and Days to Trade?

Till now, you have learned why it is essential to know about different markets and their intersections and how it can help traders to schedule their trading and be active at those specific hours. Now, let’s learn about the important days and months that a trader should never ignore. Monday, being the first day of the week, is highly important in the forex market. If there is nothing major world event happening on this day, the market remains highly volatile on this day. However, for experienced traders, Tuesday and Wednesday are the best as both days are considered days of activity. You can go through an economic calendar if you know about holidays, news and other important information. 

Talking about the month, January to May is a good time to execute forex transactions. Also, the period between New Year and Christmas is also favorable for making some investments. However, June to August is the time when there is the least volatility observed. September to December is considered an inefficient time period for forex trading, which the market participants try to improve to achieve great volatility later on.

When to Be Careful?

You need to be prepared to trade at the best times in forex. Here are a few tips that can improve your efficiency in trading:

  • You should wait for a couple of hours on Monday morning before you start trading because there is uncertainty about how the market is going to respond. So, better to wait and observe and then make a decision.
  • In case of any critical economic event, beginners should not trade as it can be challenging to predict the trading movement. So, they should know how the market reacts to the news.

Knowledge is Power:

A trader can choose the time he wants to trade based on personal preferences. But, if you really want to be successful, you should know how to make the best use of time and make better decisions. Knowing forex trading sessions gives you an advantage and helps you in efficient forex trading.

Author Paladino