When to trade in the currency market? While several key trading times can make you a profit, there are some days of the week that you should avoid. This article will discuss when to trade on the London-New York overlap, the Asian session, and the weekend. Also, it would help if you avoided trading when you are in an emotional or mental state.
London-New York overlap
More markets are open during these times, resulting in higher liquidity and wider range movements. This type of trading is particularly beneficial for speculative forex traders, who benefit from higher volumes of trades. In addition to liquidity, heavier trading is often an advantage, especially for short-term strategies.
The best time to trade Forex varies depending on your lifestyle and trading style. However, if you have limited time and are looking for higher volatility, you should trade during the London session. This session has the most transactions and volatility during the market hour, so it is the best time to trade currency pairs. You can make a profit trading during this overlap, but it is important to note that you should only trade at these times.
9:30 am – 10:30 am
The best time to trade Forex involves identifying the “overlapping” periods of the day. The first hour of trading, which starts at 9:30 am ET, is the most volatile. Many trades depict sharp price moves in one direction and then reverse. This phenomenon is known as the dumb money effect when people make best guesses based on outdated news. A seasoned trader may make valuable trades within the first 15 minutes of the market. The first 20 to thirty minutes of trading often set the trend and are followed by a significant pullback near 10 am.
Traders should take note of economic news releases and upcoming financial data. These can help them to choose the best time to trade. It can also be beneficial to trade during quiet periods and avoid volatile trading periods. Both approaches have their merits, but there is no perfect time for trading. However, certain times are better for specific currency pairs or trading styles. In other words, there is the best time to trade Forex during certain periods of the day.
Traders new to the forex market should avoid trading in the Asian session. However, it is not impossible to earn pips during this period. Traders can typically expect these occurrences to occur roughly every 8-10 days or three times a calendar month. Traders should also avoid making long-term trades during the Asian session because the risk/reward ratio is too low.
During this session, traders will typically look for sell signals near the resistance line and set an initial take-profit level near the bottom of the range. They often use oscillators to generate signals, including the RSI or Stochastic indicators. This time frame can also yield good entries, but traders should always check their charts before trading.
There are some advantages to trading currencies over the weekend. Most trading volumes are low during the weekend, and you can focus on gap trading to take advantage of sudden price jumps.
While trading on weekends is possible, it’s best to avoid the weekdays’ markets. Tuesdays and Thursdays are generally the busiest days to trade Forex, while Sundays are comparatively quiet. Despite this, traders have found that Tuesdays, Wednesdays, and Thursdays are the best days to trade Forex, as volatility is highest.