Lesson 6: The Best Moments to Trade Forex

HOW to trade Forex or WHAT pair of currency trader are issues that come up frequently, but it is also important to know WHEN trader ...

Indeed, Forex is a market open 24 hours a day, but not all periods are equal when it comes to trading. There are, in fact, periods more active than others, and the less active the market, the fewer opportunities there are.

The different "sessions" of Forex

A day on forex can be split into 3 sessions , depending on the opening of the major financial centers around the planet. These sessions are neither formal nor clearly defined, since Forex is a 24-hour open market, but these are interesting benchmarks for knowing what to trade and especially when.

Thus, the Tokyo session, the London session and the New York session can be spotted and their approximate "schedules"

* Tokyo Session: Midnight - 9 am 
* London Session: 8 am - 5 pm 
* New York Session: 1 pm-10 pm

What are the best times of the day to trade Forex?

The first thing to note is that sometimes meetings overlap:

* London session and Tokyo session overlap from 8 am to 9 am 
* The London and New York sessions overlap from 1 pm to 5 pm

These periods are therefore the periods at which the volumes are supposed to be at the maximum, since there are then the traders of several different places that are active on the market at the same time.

Let us now turn to the average volatility of the main currency pairs for each of the three Forex sessions:

Average Volatility of Currency Pairs not Session

It should be noted that average volatility is highest during the London session on all major currency pairs, which is explained by the fact that over the 9 hours of the London session, 5 hours (from 8 am to 9 am and 1 pm to 5 pm) correspond to periods when two sessions overlap.

What are the best days of the week to trade Forex?

The study the volatility of the main currency pairs and the table below make it possible to conclude that the most active days of the week, on average, are Tuesday, Wednesday and Thursday:

This does not mean that trading is to be avoided on Mondays and Fridays, but there will be fewer opportunities. In addition, Monday and Friday are often more difficult to trade, due to early weekend portfolio adjustments and weekend profit taking.

To remember

• You have to know how to choose currency pairs to trade based on the session (for more details, see your study on the volatility of the various currency pairs).

• The most active moments of the day are between 8 am and 9 am and between 1 pm and 5 pm (overlapping sessions).

• The most active days of the week are Tuesday, Wednesday and Thursday