Best days of the week to trade

Did you know that there are optimal days of the week to improve your forex trades? Research suggests that trading on Tuesday – Thursday may present you with more trading opportunities. This is when the markets are generally more active. Friday is typically busy until 12:00 pm EST. You want to trade forex during the busiest hours as high liquidity and volatility may produce better results. Always be mindful of the risks involved, however.

Managing your time

Beginner forex traders frequently become fixated on trading in what is a 24-hour, five-day-a-week foreign currency market. But trying to keep up with forex markets operating in different time zones can quickly become exhausting and impede forex trading successfully. To reduce the risk of overtrading or losing trades, rest is essential. Traders must also know when to enter or exit a trade, i.e., at what time and on what days.

When should you trade?

• Start trading when two sessions overlap. This is when important economic data is usually released which may cause volatility and directional changes.

• Begin your trading with the London session. It has the most trades overall, followed by slightly less activity in Sydney and Tokyo. 

• Most of the main currency pairs’ pip ranges broaden around the middle of the week, which normally sees the most volatility.

• Pay attention to opening and closing times. The trading week starts from Sunday 5 p.m. EST until Friday 5 p.m. The most beneficial time to trade is when the market is very active. When two or more markets are active simultaneously, the result is often a greater variation in currency pairs. Use a Forex Market Time Zone Converter to see which trading session(s) are active during your local time zone.

When not to trade

• During important news events: you may find the way you trade inadvertently swayed.

• On Sundays and during the holidays when everyone is usually away or relaxing.

• On Fridays when liquidity declines toward the end of the American session.

So, what are the most popular markets for forex trading and when are they open?

The 4 biggest forex markets worldwide

London

London is the largest currency trading market. It accounts for almost 43% of all global commerce according to a BIS estimate and is where currency trends typically originate. London massively influences currency fluctuations because it’s home to the Bank of England which oversees the monetary policy of the pound and determines interest rates. The London session usually begins at 3 a.m. and ends at 4 p.m.

New York

Open from 8 a.m. to 5 p.m., the New York market is the second-largest Forex marketplace globally. It is closely monitored by international investors being that 90% of all trades involve the U.S. dollar. The value of the dollar is also strongly impacted by changes in the New York Stock Exchange (NYSE).

Tokyo

The first commercial hub in Asia, Tokyo is where most commercial activity happens, followed by Hong Kong and Singapore. GBP/JPY, USD/JPY, and USD/JPY are generally the most traded forex pairs. The Bank of Japan (Japan’s Central Bank) has significant impact on the USD/JPY currency pair when only the Tokyo market is open, which is from 7 p.m. to 4 a.m.

Sydney

The trading day in Sydney begins at 5 p.m. to 2 a.m. Although the smallest of the markets, Sydney sees a lot of activity when markets re-open on Sunday afternoon as individual traders and financial institutions regroup after the lengthy break from Friday afternoon.

DISCLAIMER: This information is not considered investment advice or an investment recommendation but a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.