Updated: Feb 2, 2021
The important Forex trading sessions
Yes, the market is open 24 hours a day but there's a big difference between being open and being active. In Forex you can make money trading when the market moves up or down, but the best times to trade will be when the markets are active. If the markets are not moving at all then your trade is not going to go anywhere.
1. London & New York Overlap
The London and New York trading sessions are the busiest time of the day for Forex traders, as London and New York are the largest financial centres in the world. Economic and political news during this period can cause huge moves in the market, on top of this we have European news which is also released during this period. Essentially, this is the time where the most money is flowing in and out the market and the best times for Traders to take advantage of volatility.
2. Sydney & Tokyo
The other trading session which is particularly liquid is the Sydney & Tokyo overlap. Here is the time where the Japanese Yen pairs will be fairly active followed by the, Australian dollar and New Zealand dollar pairs. While money is pumping in from Asia and Oceanic traders this is a good time for retail traders to get in especially if you are a night owl.
BUT be careful if you are using a UK broker, this is because when UK banks close the brokers also close and the spreads increase over this time. This means there will be lower liquidity during this period. So, it will be best to sign up with a Japanese broker if you want to trade at this time.
3. Monday - Thursday
Many traders understand that trading session overlaps provide high liquidity and lower spread. Forex traders forget that trading certain days in the week are more liquid as well!
Normally trading between Monday and Thursday are fairly liquid but trading on Fridays liquidity dies down.
When not to trade
When popular events are happening which would mean there are less traders. e.g. The world cup final or bonfire night.
During major news. This is because trading on news is a noob way to trade fundamentally, real fundamental traders analyse economic reports on daily, weekly, monthly and even yearly basis to gauge the economic direction of a country. The LogicStrategy does this in an easy way for retail traders.
Holiday seasons, there's less trades being opened when people are away on the beaches.
Sundays, most bank traders are sleeping and enjoying their break while retail traders and the majority of the public like to relax.
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