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Today’s article enlists the 3 best times to trade and make the most out of your investment.
So, let’s get started…
But before discussing the best times, it is essential that we quickly recap the 4 major trading sessions and their EST timings.
4 Major Trading Sessions in the World
- New York
The New York market opens at 8 am in the morning and closes at 5 pm. This Forex market is the primary attention of foreign traders. This is because of the involvement of USD in major currency pairs and up to 90% of the trade.
The NYSE, i.e., The New York Stock Exchange, greatly affects the dollar and its prices in the international market. For example, if two companies amalgamate, the dollar prices can either move upward or sharply fall.
Moving on to the 2nd trading session:
The capital of Japan’s Forex market opens at 7 pm and winds up at 4 am. Tokyo’s market is the first trading center that begins in Asia. Tokyo’s market buzzes with a huge Forex trading volume in the Asian region, more than Hong Kong and Singapore.
The following currency pairs are in full action in Tokyo’s market:
- US dollar/ Japanese Yen
- British Pound/ Swiss Franc
- British Pound/ Japanese Yen
The first currency pair, i.e., USD and JPY, focus more on Tokyo’s Forex market. The reason for that is quite simple. Just as New York’s stock exchange influences the dollar, the Japanese Yen is influenced by the Central bank of Japan (Bank of Japan).
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Moving on to the third Forex market, which is Sydney.
The Forex market in Sydney, Australia, opens at 5 pm and closes at 2 am. Sydney’s market is comparatively smaller than the other 3 Forex markets. But, the market gains momentum when it opens on Sunday afternoon. This is because retail traders and some financial institutions try to regroup after the weekend break, which begins on Friday afternoon.
The fourth market I will discuss is one of the world’s most famous and prominent. That Forex market is the London Forex market.
The biggest Forex market opens at 3 am and closes at noon. The London market is the most rigorous in the world, with a high trading volume.
There are 2 reasons for the popularity of this market:
- Number 1: EUR is the primary currency in the Forex market, and London has close ties with the European Union.
- Number 2: the Bank of England’s direct influence on the GBP.
3 Best Times to Trade Forex
- Overlap in Forex Trading Times
The 4 main Forex markets in the world operate 5 days a week. When the timings of one market overlap with the trading time of the other, it is a golden time for traders to enter the market and trade.
Market overlaps result in higher prices, which means better chances of profit. Have a look at the 3 Forex market overlaps in a day:
- USA and London Market Clash
The timings of the USA and London markets clash from 8 am to 12 pm EST. This overlap is considered the heaviest, and the trading volume is at its peak. The reason behind such trade velocity is because of the 2 major currencies in the Forex world.
Traders who want to trade currency pairs involving USD or EUR wait for both markets to clash. During this time, the prices are volatile and influenced by many factors, such as the central bank’s stock exchange activities.
- Sydney and Tokyo Market Clash
Sydney and Tokyo markets clash for only 2 hours, i.e., 2 am to 4 am EST. This market clash is not as heated up as London and the USA. But, this market clash is excellent for traders who want to trade EUR/JPY currency as these 2 currencies are highly influenced during this time.
- London and Tokyo Market Clash
Again, the time clash of this market is relatively short. In fact, it is the shortest market clash in the Forex world. According to EST, both markets clash from 3 am to 4 am.
So, note the timings when the major world Forex markets clash, and set the alarm in your mobile phone to notify you about the timings. You can experiment with trading in different market clash timing to see which works best for you.
The second best time to conduct Forex trade after clash timings is Monday afternoon when the market starts to heat up!
- Monday Afternoon
Monday mornings are usually said for trading. Therefore, try to avoid trading during the daytime and wait for the afternoon. Because that’s when the market picks up pace.
Let us give you an example here:
Let’s say you had a well-relaxed weekend away from work, your boss, colleagues, clients, and everything that usually consumes you during the working days.
So, how would you feel saying goodbye to all the relaxation and resuming the hustle?
It takes time to get the hang of things on Monday morning. And after a few hours, you eventually get back into your workflow, right?
A similar thing happens with the Forex market.
At the start of Monday, things were a bit slow. But as the day goes on, the slow market picks up the pace and starts to warm up. Smart traders begin trading in the afternoon and not the morning. When the trading volume is high, traders can earn a good profit.
- Tuesday to Thursday
On Monday, things start heating up in the Forex market. And from Tuesday to Thursday, the market is in full action; that’s why many traders love trading during this time.
However, Friday is the least favorite day of traders. That’s because it’s the market’s last day; thus, many traders close their trade and exit the market. They refrain from holding the currency pairs over the weekend.
Well, due to the volatility of the market. Suppose any major news hits the market over the weekend. In that case, it will influence the price of currency when the market reopens on Monday. Therefore, traders slow down on Friday to prevent this risk and protect themselves from unforeseeable circumstances.
Remember the famous saying, “Time is money”?
It couldn’t be more accurate in the Forex market. That’s why we have provided you with the 3 best times when you can open trades and maximize your profits.
Which of the above-stated times are you planning to trade in? Let us know in the comments below.
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