Forex Trading Sessions – Best Hours/ Days to Trade, Long or Short Term
Forex Trading Sessions - When is Best Time to Trade?
It’s Education Friday brought to you from the 12 Apostles in Melbourne, Australia, far away from New York City, but guess what? I’m still able to trade forex! Because forex trading sessions are unstoppable. Today’s question is from Matty who asked:
“ What are the best time zones to trade forex?”
This question about forex trading sessions couldn't have come at a better time. Here I’m gonna show you the currency pair’s psychology in different times of the day, on the forex dance floor.
Unlike any other charted market, the forex market is open for currency pairs’ dancing 24 hours a day from 6 PM on Sunday in New York, to 4 PM on Friday. Dividing every trading day into 4 major sessions, each day starts at Sydney market open which is 5 PM to 2 AM Eastern Standard Time, moves into the Asian session with Tokyo’s market open at 7 PM to 4 AM, and just when the Asian market participants are about to close shop, their European counterparts are just beginning their day with London session from 3 AM to noon. The final session starts in New York from 8 AM to just before 5 PM when the New York Stock Exchange closes. That makes one week of forex trading sessions.
There is more fluctuation on the forex dance floor when more than one of the four markets are open simultaneously. And of course not all hours, days and forex trading sessions are created equal for profitable forex trading.
Finding the best forex trading sessions to trade largely depends on what type of a trader you are and what currency pairs you are looking to trade. Short term traders who open and exit positions throughout the day will find more opportunities when the volatility in specific currency pairs is higher. Long term trader should rather look for the best day to enter/ exit positions as the specific hours wouldn’t really matter in a long-term market analysis.
Forex Trading Sessions - Best Hours to Trade for Short-Term Traders
Let’s first cover best hours and forex trading sessions for short-term traders because I suspect they may have shorter attention span.
Here are some key points for short term trading hours:
1- The currency pairs tend to show their sickest dance moves during the London session because it crosses with two other major sessions.
2- Most short term trends begin the beginning of London session and tend to die down by the time the New Yorkers wake up
3- High volatility can also mean lower spread and commission fees depending on your broker’s trading package.
4- Best time to trade different currency pairs is when their respective market is operating. For example Mr. Aussie and Kiwi are more active during Sydney session when hot economic data is being released from the Land Down Under.
[caption id="attachment_10185" align="alignnone" width="1483"] Forex Trading Sessions - Sydney and Asian Sessions[/caption]
It is sometimes safer to trade an active currency against a currency whose session has not yet started, so you can predict the pairs movements only based on one set of economic data. Please checkout InvestDiva.com for the full chart of best currency pairs to trade throughout the sessions.
Best Days to Trade for Long-Term Traders
Long term trader! I haven’t forgotten about you. You guys including myself gotta look at different factors when it comes to analyzing the markets. Research and my own experience shows that best days to enter a long term position are Tuesday, Wednesdays and Thursdays.
Why not Mondays: You don’t want to jump in a trade right at the beginning of the trading week because the currency pairs are just waking up, haven’t really found their way on the forex dance floor and not much economic data is out yet.
Important notes about Fridays: Fridays can also be tricky because with the weekend just ahead, the currency pairs sometime kick off the next week with an unpredicted jump which can kick you out of your trade. However, Fridays are still better than Sundays and Mondays as long as you loosen up your stops and limit orders before the end of the trading week. If you are choosing a long term position on a Friday, keep in mind that US jobs reports and some other major economic data normally comes out before the market close. So be sure that the market chaos has settled down and the market sentiment has already found its direction before getting in. This also applies to traders who hold their traders for several weeks.
One last nugget of wisdom, although the forex market is open 24 hours a day, don’t feel obligated to trade all the sessions. As the commercial goes:
Sleep is a Beautiful Thing.
A good night sleep is mandatory for those of you who trade responsibly and check all points of the Invest Diva Diamond Analysis before opening a position. If you don’t know what I’m talking about, that only means you should either buy my book, the “Invest Diva’s Guide to Making Money in Forex” or enroll in our education program on Invest Diva.
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Must Have: Kiana's Forex Trading Guide for Beginners. It can be yours today on Amazon.