Trading Education

Always Know the Best Time for Trading

I receive a lot of questions like: “How do I find the best time for trading?” or “How do I know when to trade in my timezone?” Read this short article to learn when to trade to make more money on forex!

Though it’s said that forex market runs for 24 hours every day and 5 days, it is vital for traders to understand the ebb and flow of the market so that they will time their trades correctly. This is true for both day traders and trend traders because the day traders depend upon the volatility and therefore the liquidity of the market, while trend traders need to time their entry and exit correctly so that they will make the foremost of their trades. Traders also must remember of economic events that publish a day on the economic calendar to require advantage of movements thanks to released economic data.

Forex Market Hours By Region

Traders have found the forex market hours clock to be a tough one to understand as they live in different regions of the world and also due to the fact that the liquidity in the markets flows is different during the different sessions of the market. That is why, it is important to understand forex market hours on the basis of a fixed time standard and hence, we will be specifying all the times in GMT. Traders will have to find out whether they are ahead or behind the GMT and by how many hours. They will also have to keep in mind the Daylight Saving Time in their region so that they can calculate the market hours correctly.

Now, that we’ve set the bottom timezone as GMT, we advance to know the available forex market sessions. There are 4 market sessions supported timings and these are the Sydney session, the Tokyo session, the London session and the NY session. The markets are democratic is splitting these sessions across continents with one session each in Australia, Asia, Europe and therefore the America.

  • The Sydney session begins at 10 PM GMT during summer (between April and October) while it begins at 9 PM GMT during winter.
  • The Tokyo session opens at 11 PM GMT and closes at 8 AM GMT during the year.
  • The London session opens at 7 AM GMT and closes at 4 PM GMT during summer (with one hour delay in winter).
  • The NY session opens at noon GMT and closes at 9 PM GMT during summer (with one hour delay in winter).

Traders need to go through the above timings again and again a few times to fully grasp it all. The challenges in understanding this are multiple as the sessions are four and you have to convert them into your timezone and then you also have to adjust it for DST.

The Best Time of the Day to Trade Forex

So how does one use forex market hours clock while trading? The liquidity and therefore the volatility varies from session to session. It is low during the Sydney session and it picks up because the Tokyo session begins and thus the traders from Japan join those from Australia. It picks up even further during the London session, while the Sydney session is closed by then, because the major banks and hedge funds of the planet have a branch within the UK and that they join the trading and increase the liquidity within the markets. Then the NY session brings in even more volatility and liquidity into the mix and that is when the full flow of the market is seen.

Again, if you are in London for example, it is important for you to understand the forex market hours as in London so that you can plan your trade accordingly. It is always good to avoid times of low liquidity as the prices tend to be either very less volatile or too volatile and you, as a trader, would not be during a position to grasp the moves that happen within the market. None of the analysis that you simply have made, either fundamental or technical, would be useful sometimes of low liquidity because the market is rocked this manner.

As traders, it’s important to remain out at such times and choose the days when the volatility and therefore the liquidity are pretty good. This is either the London session or the best time to trade would be the time when the London session and the NY session overlap so that you get the best liquidity and volatility, these can be trusted to lead in the correct direction. The worst possible time would be the time between the end of the US session and the open of the Sydney session but of course, there are some traders (a very rare and unsuccessful breed) who like to use this lack of liquidity to scalp some quick trades.

GOOD TIP:

As we’ve mentioned earlier, the volatility within the market ebbs and flows is consistent with the forex market hours clock. It may be a good idea to download a clock software with these timings inbuilt so that you’ll refer them once you need it. Again, confirm that you simply convert these to your timezones so that you don’t get confused.

You can Download it for Free here:

Best Days to Trade

The rule of thumb regarding days of the week is that the middle days (Tuesday, Wednesday, Thursday) receive the most action. So if you want to trade just three days a week, these would be the best days.

Days to be Cautious About

Monday – Monday represents less of a pip-range than the middle three days. It is still early week and traders are still waiting for the economic news and numbers to come out during the week.
Friday — this can be the day of reversals from the main trend. Be particularly on guard the second half of Friday, as the volume can drop way down, causing spreads to greatly increase.

More About Forex Open and Close Times

Now that you have understood the different sessions and also understood why it is important to trade during times of high liquidity, lets move on to the next higher level to understand when forex market hours clock opens and closes during a time span of every week.

In the weekend, forex market is usually closed for many a part of Saturday and Sunday. But the forex trading hours on the weekend vary from region to region. The market opens for the week at 9 PM or 10 PM GMT (based on summer or winter as laid out in the table above) but the particular time varies from country to country counting on their timezone. So, for a few traders, counting on which a part of the planet they’re in, the market opens on Sunday itself while surely traders (like those in Australia), the market opens only on Monday morning.

Likewise, the forex market closes for the week at 9 PM/10PM GMT on Friday and again, counting on which a part of the planet you’re, it closes either on Friday or it closes only on Saturday early morning. This is again something that traders need to get used to so that they can time their trades correctly.

Other days you should be cautious of:

  • Non-Farm Payrolls — This can be an extremely volatile time to trade, and subsequent whipsaw moves can damage many open positions with stops that trade at this time.
  • Major News Events — these could be the speeches of Fed chairman, acts of war or terrorism. These days can be so volatile that you can be whipsawed.
  • * Medium Impact News– Don’t trade Before 20 Min & After 30 Min.
  • ** High Impact News–  Don’t trade Before 25 Min & After 45 Min.
  • Holidays (especially major holidays like July 4, Thanksgiving and Christmas).

Best Months to Trade

  • Thee THREE worst months (Summer): June, July, and particularly, August.
  • The FOUR best months (Autumn): September, October, November, and December.
  • The FIVE good Months (Winter-Spring): January, February, March, April, and May

Consclusion:

The forex market hours clock are some things that each trader should be mindful of, when he/she is trading. Again, it varies from region to region making it a difficult thing to grasp but once it becomes ingrained into the mind, then it is much easier to operate with and go with the flow.

In addition, choosing a broker in your region or with a broker that can match your daily trading hours can improve your convenience as some brokers publish daily news and forecasts, and hold costumer support in the region’s times.


P.S. Still have questions? Please send an email at olivermurphy@altraforex.com
I would love to help!

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Oliver Murphy

Hi! My name is Oliver Murphy. I am the Head of ALTRA Group, the team of the most qualified and experienced forex traders and programmers. Our Mission Statement: "Trading Forex Made Easy and Profitable for Everyone"! Join our team today!

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