Best Time To Trade Forex Pairs

Are you a beginner looking for the best time to trade forex pairs? Learn all you need to know about forex market hours with the best and worst trading times.

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You may have heard of the popular phrase time is money, and that is quite true when it comes to currency trading. Time is the most crucial factor that directly impacts your profit and loss.

Many traders in the forex market do not consider the time. However, ignoring time is not a good idea, especially when dealing with the financial market. It can lead to big losses, and the trader may blow the account.

Forex trading is all about identifying the right opportunity at the right time. However, identifying the right time may not be easy for beginners. In the blog, we will detail the worst and best times to trade forex. So Stay Tuned.

Best time for currency trading

The Foreign exchange market remains open for 24 hours and five days. Ideally, you can trade in currencies at any time from anywhere. However, even after that, timing makes the difference.

The price of currency pairs moves due to different factors. Forex market hours make a significant difference in the rate of price movements. In some trading hours, the price fluctuation rate is high, while in some, the rate is low. So, let us have a look at the best hours to trade forex:

Forex Session: Best Sessions To Trade Forex

Forex market runs in four-sessions, London, Europe, Tokyo, and Sydney. Each session opens for a few hours daily, making forex a 24-hour market.

A trader can buy or sell currencies in any of the sessions. However, the market conditions of each session are different. A trading session can change the amount of profit or loss, risk, currency pair, volatility, and liquidity.

The London and European sessions are considered the best sessions for trading in forex, especially when you are dealing in USD pairs or the currencies of European countries.

Meanwhile, the Asian sessions are not that good for trading currencies. However, if you are dealing in the currencies of Australia, New Zealand, or Asia, then you can trade during this time.

Forex Session Overlap Hours: Best hours to Trade Forex

The session overlap hours are considered the best hours to trade forex. An overlap is when two sessions open simultaneously. Basically, during session overlap, traders from both sessions are trading.

More volume means more opportunity and liquidity, ultimately resulting in good market conditions. Here is when forex sessions overlap:

European and New York Session Overlap: 1:00 PM to 5:00 PM GMT

The best time to trade currencies is during the overlap between the New York and European Sessions. This overlap occurs when two major sessions, the US and the London, remain open simultaneously. Most traders trade in US and European currencies. So the market is the busiest during these hours.

Also, USD and EURO are the two strongest currencies dominating the forex market. In addition, the big economic data and financial news released during these hours provide favourable conditions for traders. So, it is the best time to trade EURUSD, USDCAD, GBPUSD, and USDCHF.

Sydney and Tokyo Session Overlap: 1:00 AM to 7:00 AM GMT

This overlap occurs when the Sydney and Tokyo Sessions open at the same time. The market remains the least active during the Sydney and Tokyo Sessions.

However, for the traders trading in Asian Currencies, these are the best hours to trade forex. For trading in AUD/JPY, AUD/NZD, and NZD/JPY, the Asian session overlap offers great market conditions.

London and Tokyo Session Overlap: 8:00 AM to 10:00 AM GMT

The overlap occurs when the Tokyo session forex time merges with the London session. It is the least active session due to unfavourable USD trading conditions. Liquidity and volatility are also less during these hours.

However, non-USD traders can take advantage of this overlap. The session can offer good market conditions for trading minor pairs. One can trade in pairs like EUR/JPY, GBP/AUD, EUR/AUD, GBP/JPY, NZD/JPY and many others.

Forex Week: Best Days To Trade Forex

Forex Market opens from Monday to Friday. However, Monday marks the beginning, while Friday ends the forex week. As a result, there is a lack of news and big events.

Meanwhile, Tuesday and Thursday are mid-forex days. There are many events and news releases during these days. In addition, traders are the most active result. As a result, liquidity is high from Tuesday to Thursday, making them the best days to trade forex.

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Worst Time to Trade Forex

Like the best, there is also a time when you need to avoid trading. The risk of currency trading during these hours is high, and one may suffer huge losses. So let us discuss the worst time to trade forex pairs:

Opening and Closing Hours:

The opening and closing hours of the trading week and a day observe less liquidity. Therefore, forex trading start time and ending period do not offer ideal conditions for currency trading.

So, a trader should avoid trading during the start of Asian sessions somewhere around 12:00 to 2:00 GMT and the end of the US session around 22:00 to 24:00 GMT.

Holidays and Weekends:

Forex is a global market where traders from all around the world participate. There are days when the forex market remains open; however, the major economies observe holidays due to festivals or any other events.

You may have seen low trading volume during the last days of December. The month observes festivals like Christmas and New Year’s, so people are not that active in the market. That is why trading on holidays or weekends is not a good idea.

Financial News & Big Data Releases:

In the forex market, news and economic events play a crucial role in fundamental analysis. These data throw light on the economic health and stability of the country.

Positive data or news is bullish for a currency, while negative data or news is bearish. Traders watch news and data to predict the currency market.

However, major news releases or data can change the entire market scenario. If data comes against the forecast, then it will have a huge impact on currency that can ultimately lead to big losses.

Geopolitical Events:

Like news, one should avoid trading in forex during major geopolitical events. It may include elections, diplomatic events, conferences, and meetings.

Trading during such events is highly risky, especially when the results are uncertain. For example, the present Iran and Israel conflict is impacting XAU/USD trading significantly. The prices become highly volatile, making it difficult for new traders to trade.

Conclusion

We have discussed the worst and the best time to trade forex pairs. However, one thing to remember is that the ideal and unfavorable trading times differ from trader to trader.

The above timing is based on the overall analysis of the market. However, you need to conduct a study to determine what works for you and what does not.

A trader should consider the currency pair, capital, risk, leverage, and many other factors to identify the right time. In addition, a trading journal should be prepared to track the right timing for trading.