Have you ever wondered when the best time to trade forex is? Timing can play a crucial role in your trading success.
In this article, we’ll dive into the importance of timing and help you discover the best time to trade forex for maximum gains.
Best Time To Trade – Top Questions Answered
Trading Forex at night can be profitable, especially if you’re focusing on pairs involving currencies from active markets during this time, like Asian or Australian markets.
The best time frame to trade Forex depends on your strategy. Daily charts could be ideal for long-term investors, while 1-hour or 15-minute charts might suit day traders.
The best Forex chart time frame to trade largely depends on your trading style. Intraday traders may prefer shorter time frames like 5-minute or 15-minute charts, while swing or position traders may opt for daily, weekly, or monthly charts.
The best time to trade Forex is when the market is most active, typically during the overlap of the London and New York sessions (8 AM to 12 PM EST).
The best time to trade EUR/USD is during the New York and London market hours (8 AM to 12 PM EST), when this pair has the highest liquidity.
The GBP/USD pair is most active during the overlap of London and New York sessions (8 AM to 12 PM EST).
For scalping, lower time frames, such as the 1-minute to 15-minute charts, are often used due to the quick nature of trades.
USD/JPY sees the most liquidity during the overlap of the London and New York sessions and also during the Tokyo session.
XAU/USD or Gold can be traded effectively during the London and New York sessions when the market is highly active.
The worst time to trade Forex is usually when the market is very quiet, like the late New York session (after 5 PM EST) and before the Tokyo session opens.
The worst months to trade Forex are typically the holiday months of December and the first half of January, when the market liquidity tends to decrease.
The AUD/USD pair can be effectively traded during the Sydney session and the overlap of the London and New York sessions.
The best months to trade Forex are usually when the markets are in full swing, typically between September and November.
The best time to trade AUD/JPY would be during the Sydney and Tokyo sessions when both these markets are open.
The best time frame for day trading Forex often ranges from 1-minute to 4-hour charts, depending on your trading strategy.
USD/CAD is most active during the overlap of the New York and London sessions.
EUR/JPY can be traded effectively during the London session and the overlap of the London and New York sessions.
GBP/JPY sees high liquidity during the London session and the overlap of the London and New York sessions.
The best time frame to trade Forex greatly depends on your trading style and strategy, ranging from 1-minute charts for scalping to weekly and monthly charts for long-term position trading.
The best time to trade Forex in the USA largely depends on the currency pairs you plan to trade. However, for most traders, the most active and therefore best time is during the overlap of the London and New York sessions, which is from 8:00 am to 12:00 pm EST. This is when liquidity is at its highest, as many trades are happening, resulting in tighter spreads. But remember, the best time to trade also depends on your trading strategy and risk tolerance.
For traders in Houston, the best time to trade Forex would be the New York session, particularly the overlap with the London session from 7 AM to 11 AM CST.
For South African traders, the best time to trade Forex is during the London session, which starts around 9 AM South African Standard Time.
The best time to trade the Asian session would be during its peak hours, which is between 12 AM and 3 AM EST.
For traders in Nigeria, the best time to trade Forex is during the London session, which starts around 9 AM West Africa Time.
For traders in Malaysia, the best time to trade Forex is during the early hours of the Asian session, which starts around 7 AM Malaysian Standard Time.
3 Factors To Help You Determine The Best Time To Trade Forex
Finding the best time to trade Forex involves considering the overlapping trading sessions, the most active currency pairs during each session, and the optimal time for different trading strategies.
1. Overlapping Trading Sessions
The forex market’s most volatile and active periods occur when two trading sessions overlap.
The most significant overlap is between the London and New York sessions, where European and North American traders are active.
This overlap presents excellent trading opportunities with high liquidity and significant price movements.
2. The Most Active Currency Pairs During Each Session
Each trading session has its most active currency pairs, which can help you decide when to trade:
- Sydney Session: AUD/USD, AUD/JPY, and AUD/NZD
- Tokyo Session: USD/JPY, EUR/JPY, GBP/JPY, and AUD/JPY
- London Session: EUR/USD, GBP/USD, EUR/GBP, and USD/CHF
- New York Session: EUR/USD, USD/JPY, GBP/USD, and USD/CAD
3. The Best Time to Trade for Different Trading Strategies
Your trading strategy can also influence the best time for you to trade Forex:
- Day Traders: Day traders should focus on the most active hours of the major sessions, particularly the London and New York session overlap.
- Swing Traders: Swing traders can benefit from trading during the early hours of the major sessions when trends often begin to form.
- Scalpers: Scalpers need high liquidity and tight spreads, most prevalent during overlapping sessions.
Ultimately, finding the best time to trade Forex depends on your trading strategy, preferred currency pairs, and individual goals.
Understanding the different market sessions and their unique characteristics lets you decide when to trade for the best results.
4 Major Forex Trading Sessions
The forex market operates around the clock, allowing traders to take advantage of trading opportunities whenever they arise.
The market is open 24 hours a day, during the week, because at least one financial center is always open for business, making it a truly global market.
There are four major forex trading sessions, each with its own unique characteristics and trading opportunities:
- Sydney Session: The Sydney session starts the trading day and is generally considered the smallest of the four sessions. Despite this, it can still present profitable trading opportunities, especially when major Australian economic data is released.
- Tokyo Session: As the Asian financial hub, the Tokyo session can be quite volatile, particularly for the Japanese Yen and other Asian currencies. This session offers a great opportunity to trade Forex during Asian hours.
- London Session: The London session is often considered the most liquid and volatile, making it a popular choice for forex traders. The high trading volume during this session can lead to significant price movements, particularly for the European currencies.
- New York Session: The New York session is the last major session of the day and is known for its high liquidity and trading volume. This session is particularly active for the US Dollar and other North American and South American currencies.
What Time Frame Should I Trade?
Beginner traders don’t perform as well as they should because they usually trade at the wrong time.
Because new forex traders want to get rich quickly, most will begin trading in small time frames, such as 1-minute or 5-minute charts.
As a forex trader, you should understand which time frame to trade on.
For some forex traders, the 1-hour charts are the most comfortable to trade. This time frame is longer but not excessively so, and trade signals are fewer but not excessively so.
Trading in this time frame allows you to take your time analyzing the market and not feel rushed. However, some traders are uncomfortable with the 1 hour time frame because it’s too slow for them.
Most prefer to trade on the 10-minute chart since it gives them enough time (but not too much) to make trading-related decisions.
Other traders decided to only trade daily, weekly, and monthly charts because they thought hourly trades were too fast. So, you’re probably wondering the best time frame for you.
Choosing The Best Timeframe
If you’ve been paying attention, you’ll notice that it all depends on your personality. You must be at ease with the time frame in which you are trading.
When you’re in a trade, you’ll always feel some kind of pressure or frustration because real money is involved. That’s understandable.
However, you should not believe that the reason for the stress is that things are moving too quickly for you to make decisions or too slowly for you to become frustrated.
Most traders couldn’t stick to a time frame when they first started trading. So they began with a 15-minute chart before experimenting with the 5-minute, 1-hour, daily, and 4-hour charts.
This is normal for all new forex traders until they find their comfort zone, which is why we recommend that you DEMO trade using different time frames to see which best suits your personality.
What Time Frame is Best For Trading Forex?
Long-term traders typically use daily and weekly charts. The weekly charts will provide a longer-term perspective and will aid in placing daily entries. Trades typically last a few weeks to several months, if not years.
- There is no need to monitor the markets throughout the day. When there are fewer transactions, there are fewer opportunities to pay the spread and more time to consider each trade.
- Typically, only one or two large swings are produced per year, so PATIENCE is required. A larger account is required to ride longer-term swings.
- Losing months regularly.
2. SHORT-TERM (SWING)
Hourly time frames are used by short-term traders, who hold trades for several hours to a week.
- More trade opportunities. Months are less likely to be lost.
- Less reliance on one or two trades per year to generate profits.
- Transaction costs will rise (more spreads to pay). Therefore, the overnight risk becomes a consideration.
INTRADAY Traders use minute charts such as the 1-minute and 15-minute. Trades are entered during the day and exited at the end of the day.
- There are numerous trading opportunities.
- There is a lower risk of losing months overnight.
- Transaction costs will be significantly higher (more spreads to pay).
- Mentally more difficult because biases must be changed frequently.
- Profits are constrained by the need to exit at the end of the day.
What To Consider:
Larger time frames necessitate larger stops, and thus a larger account, to handle market swings without facing a margin call. It’s important to note that whatever time frame you choose to trade should be compatible with your personality.
This is why we recommend experimenting with different time frames to find your sweet spot. It will assist you in determining the best fit for you to make the best trading decisions possible.
The Best Days to Trade Forex
So we know that the London session is the busiest of all the sessions, but there are certain days of the week when all markets tend to move more.
Studies show that it’s best to trade during the middle of the week because this is when the most action occurs.
Fridays are typically busy until 12:00 PM EST, when the market virtually shuts down until it closes at 5:00 p.m. EST. This means that on Fridays, we only work half days.
Weekends always begin early. So, based on all of this, we’ve discovered the busiest and best days of the week to trade forex. Because high volatility presents more opportunities, the busiest times are usually the best times to trade.
Use Your Time to Trade Wisely
There is no way to trade all sessions unless you are Edward Cullen, who does not sleep. Why would you, even if you could? While the forex market is open 24 hours a day during the week, this does not mean there is always activity!
Furthermore, sleep is an essential component of a healthy lifestyle! You need sleep to recharge and have the energy to do even the most mundane tasks. If you want to become a hotshot currency trader, you’ll need to get some rest.
Every trader should understand when it is appropriate to trade and when it is not. Understanding when it is best to trade and when it is best to sit out and play Fortnite instead.
I hope this guide has given you insights on the best time to trade forex, the best time of day to trade forex, and the best days to trade forex. Here’s a quick reference guide to the best times to trade Forex:
- When two sessions overlap! These are also when major news events likely cause volatility and directional movements.
- Note the opening and closing times by bookmarking the Market Hours cheat sheet.
- You can also use our Forex Market Time Zone Converter to see which trading sessions are open in your current time zone.
- The European session is usually the busiest of the three.
- The middle of the week typically sees the most movement as the pip range for most major currency pairs widens.