5.When can you trade FOREX

When can you trade FOREX

We all know Forex market is open 24 hours a day and then why do we need a topic “When can we trade Forex”. An obvious query. The answer is as a trader you should know when is the market active, which means you should know when the market is moving so that you can make money. Identifying the right time to trade is one of the very important points in becoming a successful Forex trader. That is the ultimate goal. Isn’t it so? Yes, let’s get started then. 

One of the biggest advantage of Forex Trading is the ability to trade 24 hours in a day. But each trading day is composed of the following trading sessions:

  • Sydney Session
  • Tokyo Session
  • London Session
  • New York Session

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If you check this out, you will get to know there are hours in trading sessions which overlap, meaning there is a period during which two sessions are open at the same time.  

For example, Sydney and Tokyo Session overlap between 7 PM to 2 AM. Thus, trading AUD/JPY currency pair during this overlapping period would give better results when both the markets are active and moving. Highest volumes of trades happen during those overlapping hours and thus the market offers more liquidity. 

If you want to trade on currency pairs like EUR/USD, USD/CHF or GBP/USD, you will find that the best trading time is when both London and New York markets are open, i.e. between 8 AM and 12 PM. 

The key point to remember is that when trading Forex, the trader has to determine the best time his currency pair is tradable and then do the trade, i.e. he has to understand the timeframe during which his currency pair is most active.  

So, when do you think is the market more liquid? You guessed it right. It’s exactly when there are more participants. And when do you have more participants? It’s simple. When two sessions overlap. But it’s not always the case. London-New York sessions overlap period seems to be the busiest time of day when traders are most active. Big price movements happen during this period and it’s the time when news reports are released from US and Canada. 

Thus, when we say Forex is tradable 24 hours we mean there is always a market open somewhere. Besides this, traders should look for economic news or any government reports releases. Economic factors in major countries should be looked out as they affect the market hours and its operations. It can result in substantial increase in market activity and hence better opportunities for traders. 

To summarize, as a trader you have to be vigilant about the economic conditions and government releases from all the major countries. It can either be the best time for trade or it can be a period during which you would want to suspend your trading. Whichever you choose, always ensure you are aware of the price changes during a news release. Each trader is different and some decide to look for peak hours and some look for quite hours depending on what proofs beneficial to them. Experience is the best guide to analyse this and this learning is surely the first step to reach there. 

Also, trends show that during late trading sessions market is less volatile(less change in price) and hence offers the best trading results. Of course market behaviour changes on a day to day basis but lots of analysis from past few years indicate a stable trend and hence the conclusion about best trading time is made.

Now that you know how to be cautious while choosing your best trading time, make sure you don’t miss out the opportunity!

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