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When is Forex trading and when is the best time for Forex trading?
2022-03-11
2016
We all know that foreign exchange trading operates 24 hours a day,and after one trading session has passed,the next trading session will take over the trading power.It is difficult to say when is the best time to trade currencies.But time is still one of the most important factors when deciding on a trade.
In fact,even though the foreign exchange market is open 24 hours,it does not mean that it is active all day.You can make money when prices go up and you can make money when prices go down.
However,you should know that it is very difficult to make money when the market volatility is very low or even no volatility.This is where trading hours and liquidity are concerned.
Forex market hours
Before we get into the best time to trade,Mutual Markets takes you through what the 24-hour Forex market looks like.
The foreign exchange market can be divided into four main trading sessions:Sydney session,Tokyo session,London session,and New York session.
Historically or geographically,the foreign exchange market has three peak trading periods,which are periods of high volatility.Volatility means profit opportunities.Therefore,global traders are often very focused on one of these three trading sessions,rather than trading 24 hours a day.
These three sessions are the Asian,European and North American trading sessions,also known as the Tokyo,London and New York sessions.The transaction volume of the four major foreign exchange trading centers including London,New York,Singapore and Hong Kong accounts for 75%of the global total.
Traditionally,the International Date Line is the beginning of a new day and the end of an old one.
Since New Zealand(Auckland)is one of the world's major financial centers,the foreign exchange market opens from there every Monday morning,which is still Sunday in most of the world.Although trading started in New Zealand,we generalized this to the Sydney session.
Global foreign exCM Trade will end the New York session until Friday.Except for weekends,there are only two public holidays when the entire foreign exchange market is closed,namely Christmas and New Year's Day.
Below is the opening and closing schedule for each trading session:
American Spring and Summer(March/April-October/November)
American autumn and winter(10/11-March/April)
The opening and closing times of each trading session are mainly based on the operating hours in the region,with most markets open between 7am and 9am locally.
summer time
Due to the transition to Daylight Saving Time(DST)in some countries and regions(such as the US,UK and Australia),the opening and closing times will be different in October/November and March/April.Also,some countries have different dates when they enter DST,which may confuse us.
For example,the United States enters daylight saving time on March 14,2021,Europe enters daylight saving time on March 28,and Australia enters winter time on April 4.
Then,the Forex trading hours of most brokers will also change.For example,starting from March 15,2021(Monday),the MT4 server time of ATFX,a well-known British online broker,will be changed from GMT+2 to GMT+3.Changes in server time will not affect customers'trading orders.
Changes in the trading hours of some products announced by ATFX when entering daylight saving time
Dealing with daylight saving time is relatively confusing,but that's what happens when markets trade 24/7.Keep in mind that FX market opening hours will change in March/April,October/November as countries enter DST on different days.
Overlap of trading hours
considering the best time to trade Forex is trading session overlap.This refers to the time period between two major trading sessions.Based on this,there are two trading session overlaps that deserve our attention.
Tokyo-London trading hours overlap
During summer,from 3:00-4:00 AM ET,the Tokyo and London sessions overlap.
The overlapping Tokyo-London trading hours may not be the best time to trade Forex.This is a fairly quiet period during which momentum builds up slowly.Active traders are more likely to be attracted to the next overlap.
London-New York trading hours overlap
Summer and winter,from 8:00AM-12:00PM ET,with overlapping London and New York sessions.
In comparison,the London and New York overlapping sessions are arguably the best trading sessions.This is often the time when the market really kicks in and is the busiest time of the day,as traders from the two biggest financial centres of London and New York are already in action.
It was also during this time that we were able to see some huge volatility in the markets,especially when the US and Canadian economic data were released.Of course,the market will also be impacted by news factors from late European trading.
If the market establishes a trend during the European session,we will most of the time see that trend continue during the New York session.This is because traders from New York tend to think about jumping in and building their positions after reviewing earlier market conditions.
However,you need to pay special attention to the fact that in the late European session,the liquidation of European traders may cause some volatility in the market in the mid-day New York session,so be careful in advance.In addition,foreign exchange traders in Taiwan have an incomparable time advantage in other time zones,that is,they can seize the most volatile time period from 15:00 to 24:00 Beijing time.
Let's take a look at the average spread changes for the major currency pairs in each Forex trading session:
As you can see from the chart above,exchange rates are generally more volatile during London trading hours,while some currency pairs have much wider spreads than others,as shown in the chart below.
The best time to trade forex
It is difficult to say which day is the best time to trade Forex.It's safe to say that usually Mondays are not as active as the rest of the week.On Monday,the market is choosing its direction,so this may not be the best time to trade Forex.
From Tuesday,most of the reports will be released one after another,and the momentum will gradually build.Friday is another day that is usually unpopular with day traders.This is the end of the trading week and many traders are closing their positions.
This means that Tuesday,Wednesday and Thursday may be the best time to trade forex.Not every week is the same,but this is more or less the rule many traders follow when considering the best time to trade Forex.
Is it necessary to trade at a certain time?
of course not!Nothing is more misleading than the notion that you need to trade at a certain time or day to be profitable in Forex.These are just general guidelines to help you better understand the market structure.
Keep in mind that self-discipline,trading plan and correct trading technique are the most important profit factors.Therefore,the best time to trade Forex should be after you think you are ready to trade.In the end,it's not the time or the day of the week that matters.The best time to trade Forex depends on your trading plan.
As a trader,it is important to know the general structure and what to expect at certain times of the week.The rest depends on our experience as traders.But if you are persistent enough and willing to learn,you can find your best trading time.
The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.
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