Course 306 – Best Days of the Week to Trade Forex

Now we’ve learned that the London session is the busiest of all the sessions, it’s also noted worthy to know that there are also certain days in the week when all the markets tend to exhibit stronger movement.

Below is a chart of the average pip range for the major pairs for each day of the week:

TABLE

From the chart above, it’s obvious that trading is best done during the middle of the week since this is when it’s most active in the markets.

On Fridays, business is pretty much half day because it’s usually busy until 12:00 pm EST and then the market slows down until it closes at 5:00 pm EST. This means we only work half-days on Fridays.

You can say “Thank God it’s Friday” right after 12:00 pm EST.

Because of these factors, we’ve familiarized ourselves with the busiest and best days of the week for trading forex.

The busiest times are usually the best times to trade since high volatility comes with more opportunities.

TIME MANAGEMENT

It’s important that every trader learns when to trade and when not to. Though the forex market is open 24/7, it doesn’t mean that the market is active at all times!

Even if it were, you would need time to sleep. Remember sleep is necessary for healthy living and you’ll definitely need to take time out to rest if you plan on becoming a successful currency trader.

Here’s a quick guide on the best and worst times to trade:

BEST TRADING TIMES

• When two sessions overlap. These are also the times when major release of news reports that could start some volatility and set the next pace. Take note of the Opening and Closing times as well.
• The European session has overtime proven to be the busiest out of the three.
• Mid week usually shows the strongest movement, since the pip range widens for most of the major currency pairs.

THE WORST TRADING TIMES

• Sundays– everyone is taking time out to rest!
• Fridays– liquidity thins out after 12:00pm EST of the S. session.
• Holidays– Nobody is working.
• Major news events– you don’t want to find yourself between the devil and the deep blue sea.

And if you can’t seem to trade during the peak sessions? Don’t panic.

You can always be a swing or position trader. We’ll be learning about that later.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT

In forex trading, liquidity is highest when there are more people participating in the markets.

It’s only rational to think that this happens during the overlap between two sessions. Well, that’s not totally correct.

Let’s learn about some of the characteristics of the two overlap sessions to see why it’s so.

TOKYO – LONDON OVERLAP

Liquidity during this session is slow for some reasons. At this time, movement is minimal on the Asian side of the session, because this is about afternoon time when traders go for lunch breaks.

Their European counterparts on the other hand are just trickling into offices at this time, this means trading becomes slow and boring as liquidity thins out.

This would be an ideal time to take a break or look for potential trades to engage for the London and New York sessions.

LONDON – NEW YORK OVERLAP

It gets super duper active at this time of the day. It is the busiest time of the day; traders from the two largest financial centers (London and New York) are working at this time.

It is also during these sessions that there are strong moves, especially because economic reports from the U.S. and Canada are released about this time too.

The markets are also sometimes shaken by “late” news releases from Europe at this time too.

Trends established earlier during the European session, might just go on, as U.S. traders would normally start out by choosing their positions and strategies based on information from happenings in the earlier sessions.

You should however be careful because towards the end of this session, some European traders may be closing their positions, and this could lead to some significant changes just before lunchtime in the U.S.

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT

Just as the European traders are getting back from their lunch breaks, the U.S. session resumes at 8:00 am EST with traders opening for business.

The U.S. session, like the Asia and Europe sessions, has it’s one major financial hub and traders always have their focus on that place; New York City!

Below is a table of the New York session pip ranges of the major currency pairs.

TABLE

These pip values were derived based on the averages of past data. Take note that these values are not constant values and can change depending on liquidity and other market conditions.

Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some facts you should note about trading during the New York session:

• During the morning, when it overlaps with the European session, there is high liquidity.
• Most economic news are released towards the start of the New York session. Note that, about 85% of all trades involve the dollar, so whenever big time U.S. economic data is released, it tends to move the markets.
• Liquidity and volatility becomes minimal during the afternoon U.S. session when the European markets most have closed for the day.
• There are chances of reversals in the second half of the Friday sessions, as U.S. traders would normally close their positions against the weekend, in order to limit exposure to any weekend news.
• Friday afternoons are usually slow, as Asian traders are out singing in karaoke bars while European traders head off to the pub to watch the soccer match.

Which Pairs Should You Trade?

Note that liquidity is normally on the rise because both the U.S. and European markets will be open simultaneously.

This allows you to trade almost any pair, although it is advised that you focus on the major and minor pairs and avoid the unusual ones.

Also, note that having the U.S. dollar on the other side of the majority of transactions means participants will be focused on U.S. economics reports.

Whatever these reports turn out to be could dramatically change the course of events in the markets resulting in the easy fluctuation of the dollar.

If you’re unsure about when each session commences, you should check out our next lesson!

We advise you to open a Demo account for the purpose of this phase of learning.

Click on this LINK to create a HotForex Demo or Live Trading account >>> OPEN ACCOUNT