We know that the Forex market is open 24 hours on all days except for the weekend. Does this mean that you can take a trade anytime on any day? Well, you can, but this is not what the professionals prefer.
If you want to bring in professionalism in your trading, then there are specific days and times to enter the market. Let us discuss that here.
Best Times of the Day to Trade
The primary factor we consider to trade forex is the liquidity and the volatility; because, if there’s no liquidity, it is not possible to make a profit from a trade. So, we must determine the times of the day when the market is liquid and volatile.
In the previous lessons, we have discussed the different sessions of the market. We talked about the overlap of sessions as well. Let’s bring that concept back here to understand the best times to trade forex.
During the overlap of sessions, there are two sessions that trade the market. Naturally, the number the traders increase, and so does the volume of orders. Hence, this significantly builds up liquidity and volatility.
Which Overlapping Session to Focus on?
Though there is an overlap in the sessions, the liquidity is pretty thin. This is because; normally, there is not much movement in the Asian session when the London session begins. So, this overlap session is only dominated by the London session.
London-New York Overlap
This is the busiest time of the day, as the two largest financial institutions are open for trading. During this session, one can expect some big moves from the markets. Moreover, this is when the major news in the U.S and Canada is released as well.
Best Days of the Week to Trade the Market
Apart from understanding when exactly to trade, we must also know the preferred days to trade in the market.
Below is the chart of the average pip movement of different pairs for each day of the week.
From the above chart, we can see that most trading happens from Tuesday-Friday. On Fridays, the market is busy only until 12:00 PM EST, and later it just loses pace. Hence, from this, we can conclude that the ideal day to trade is during the middle of the week as we can expect good liquidity in the market.