The post Best Time to Trade Forex by Sam Boughedda, Stock Market Analyst appeared first on Benzinga. Visit Benzinga to get more great content like this.
While the forex market is open 24 hours a day, 5 days a week, it doesn’t mean all trading hours are created equal. As a result, certain times or periods of the day offer more activity and volatility compared to others, leading to potentially more trading opportunities.
This article discusses the best times to trade currency pairs, taking into consideration aspects such as volatility, market volume and news releases. Certain trading strategies are best suited to specific times of the day.
Whether you are a beginner or an experienced trader, read on to find out the best times to trade forex and how to maximize your profits.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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What Are Forex Market Hours?
Traders can trade forex pairs 24 hours a day, 5 days a week, from Sunday evening until Friday night. However, it is not evenly divided into hours. Instead, the forex market is divided into four main trading sessions based on geography — the Sydney session, Tokyo session, London Session and New York session or Pacific, Asian, European and American.
For example, the Pacific session, in territories such as Australia and New Zealand, is the first of the day, followed by the Asian session. Then comes the European session, and after that, the final session of the day is the U.S. or New York session.
Market Overlap
When trading forex, it is important to be aware of the overlap between trading sessions, which is generally when most of the trading activity occurs. For example, the London session starts at 8 a.m. local time, which is 3 a.m. EST. The New York session opens at 8 a.m. EST when it is 1 p.m. in London, so the sessions overlap. The overlap of these sessions is the most active time of the day for forex trading.
The rise in activity during overlaps creates high volatility, which can lead to an increase in trading opportunities.
3 Best Forex Trading Sessions
So you know when you can trade forex and that there is an overlap between various sessions globally. But what are the best forex trading sessions?
European-North American Overlap
The European-North American forex overlap occurs from 8 a.m. EST to 12 p.m. EST, as this is the time when both markets on each side of the Atlantic are open. As a result, the market experiences a lot of trading activity and liquidity, making it a good time to trade for those who want to take advantage of the volatility and volume.
Asian European Overlap
The Asian-European overlap forex trading overlap refers to the period of time when the Asian and European trading sessions cross over, resulting in an increase in trading activity and liquidity. The overlap can create volatility in the market, providing a faster-paced market and the potential for more trading opportunities.
Forex traders should note that fewer news releases occur between these two periods.
Australian Asian Overlap
The Australian Asian forex trading session overlap is the period when the Sydney and Tokyo forex markets are open simultaneously, between 8 p.m. EST and 2 a.m. EST. Given that the period does not include London or New York — the two busiest — it is less volatile and liquid than the other overlaps, although it does increase during the crossover period.
Certain currencies, such as the AUD, JPY and NZD, may see an uptick in activity during the overlapping period.
How News Events Impact Forex Trading
Forex trading can be impacted by several factors, with news being one of them, especially if you are more of a technical analysis-focused currency trader.
For example, volatility rises around major news releases, sometimes resulting in wide price spikes that threaten to stop traders out of positions. As a result, it can be difficult to trade during these times, with the market too volatile to make accurate predictions.
Liquidity will generally increase around news releases, making it easier to get in and out of trades.
However, it is important to be aware that news releases can provide a sharp change in market sentiment, with traders potentially becoming more bullish or bearish on a particular currency based on positive or negative news for the country’s economy.
- Retail sales figures: This data is released each month and measures the amount of money consumers spend on finished goods. It is a good indicator of economic growth, as it shows how much money consumers are spending.
- Non-farm payrolls: Non-farm payroll data measures the number of jobs added to the economy in a given month, except for farm workers and workers in some other job classifications. It is closely watched as it shows how many people are being hired.
- Unemployment rates: The unemployment rate calculates the percentage of the labor force that is currently unemployed, showing how many people are out of work.
- Consumer price indexes: The consumer price index (CPI) measures the shift in the prices of goods that consumers buy based on a certain basket of goods. It is a widely used measure of inflation because it shows how much prices are rising.
- Gross domestic product (GDP): GDP calculates the total value of goods and services produced in a country in a given year. It is considered the most comprehensive measure of economic activity and is used to measure the size and health of a country’s economy.
- Benchmark interest rate announcements: Central banks such as the U.S. Federal Reserve make benchmark interest rate announcements, setting the interest rates that banks charge each other for loans. The announcements usually result in significant volatility in forex markets, especially in the currency impacted.
- Consumer confidence indexes: Consumer confidence is measured via a survey and provides data on the level of confidence consumers have in the economy.
Benefits of Sticking to a Trading Schedule
Traders gain various benefits from sticking to a trading schedule. For example, having a plan and including a schedule for your trading day will help you make more objective decisions. You know what you will trade and have an idea of when you are going to trade it, taking the guesswork out of the equation and reducing the probability of making emotionally charged decisions.
In addition, sticking to a trading schedule means you are less likely to overtrade or make impulsive decisions. As a result, it will help you to protect your capital and hopefully improve your long-term trading results.
Take the Next Steps to Trade Forex
Trading forex can be difficult if you don’t select the broker that works best for your needs. The fees may be high, or the broker may not provide the pairs you want to trade on its platform. Below is a list of some of the top forex brokers available.
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get started
securely through Plus500’s
website
Plus500 is a CFD broker with a wide portfolio of 2800+ CFDs, 2700+ Shares, and a variety of Futures (Crypto, Metals, Agriculture, Forex, Interest Rates, Energy, and Equity Index). For those who are new to the market, CFDs are similar to binary options in the U.S. where traders take all-or-nothing speculation on the prices of certain securities like indices, commodities or currencies. While not legal to trade in the U.S., CFDs are legal in many jurisdictions across the globe and Plus500 offers a wide array of tradable markets using these instruments. U.S. customers can, instead, take advantage of the US-based Plus500 Futures platform.
Plus500 US offers a deposit bonus of up to $200, which allows you to trade without paying commissions until the deposit amount is used up. The bonus only applies to your first deposit. In addition, there are:
- No Data fees
- No Platform fees
- No Deposit and withdrawal fees (except wire withdrawal)
- No Inactivity fees
- No Routing fees
86% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Best For
- Traders looking for a smooth mobile experience
- Accepts U.S. forex traders
- Web platform and mobile app offer robust charting capabilities, ensuring a consistent experience across all devices
- Low spreads and commissions and no withdrawal fees
- Unlimited demo account & 24/7 customer support
- Lacks some advanced tools making it less attractive for active traders
- Higher fees than competitors
get started
securely through FOREX.com’s
website
The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account
FOREX.com is a highly trusted global broker for forex and CFD traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for traders searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels.
FOREX.com is regulated by Commodity Futures Trading Commission (CFTC) and member of the National Futures Association (NFA) in the U.S. They also are regulated by the Financial Conduct Authority (FCA) in the UK among other regulators including CIRO, ASIC and more.
Best For
- MetaTrader 4 and 5 users
- Beginner forex traders
- Active forex traders
- Demo account
- Customizable charts with 14 time intervals and multiple time charts
- Up to 5% cash back of the initial deposit
- 80+ technical indicators
- Leverage available up to 50:1 for U.S. trader
- Exclusive trading tools including Trading Central, NinjaTrade, Smart Signals, Performance Analytics and Capitalise.ai
- Trade to your full capability with the mobile app with quality execution with one-swipe trading, advanced TradingView charting and analysis tools, real-time trade & order alerts and full account management features
- Live market analysis, VPS hosting, IRA accounts, corporate accounts, RAW pricing
- EUR/USD spread as little as 0.0 and low commissions
- 30 indicators for technical analysis, nine timeframes and graphical objects such as Line Studies and Shapes on MT4
- No negative balance protection
- Only supports forex in the U.S
Get started
securely through Trading.com’s
website
Trading.com is a highly regulated counterparty designed for a new generation of traders, offering easy and intuitive access to forex trading. To excel in the forex market, you need access to diverse currency pairs, robust trading platforms, reliable execution and a competitive spread. Trading.com excels in all these criteria, offering 65+ forex pairs and real-time market execution on the cutting-edge MT5 platform.
As part of its commitment to providing the best forex trading conditions, Trading.com offers ultra-tight spreads, zero commissions and competitive leverage on major currency pairs. Beginner traders with little or no experience will find its comprehensive educational resources valuable. A practice account with $10,000 in virtual money is available to help traders build confidence before trading live.
Trading.com is the ideal counterparty for diverse traders, including beginners and experts seeking optimum trading conditions. In this Trading.com review, we analyze the trading conditions, platforms, core features and overall product offerings to help you decide if it is a suitable counterparty to kickstart your forex trading journey.
Best For
- Experienced forex traders seeking counterparties that provide commission-free real-time market execution on the MT5 platform with ultra-tight spreads, competitive leverage and access to a diverse market
- Pattern-day traders and scalpers looking to optimize trading performance by capitalizing on real-time market execution provided by Trading.com
- Beginner forex traders can also find Trading.com ideal due to the flexibility of its practice account, which gives them ample time to build confidence and gain mastery of the trading platform before trading live account
- Dedicated support 24 hours a day, 5 days a week
- Fast and hassle-free account setup and onboarding process
- Leverage available up to 50:1
- New customers can receive a $100 no deposit bonus
- Customizable and intuitive web and mobile trading platform for seamless on-the-go trading
- Free practice accounts with $10,000 virtual funds and no expiry date
- Cutting-edge trading platform — MetaTrader 5 is available on desktop mobile platforms as well as a web terminal
- Robust technical indicators and advanced charting for in-depth market analysis
- Excellent research and educational resources, including well-crafted articles, video tutorials, forex glossaries and calculator
- Trading.com is regulated by Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA)
- Relatively new to the U.S. market
- No copy or social trading integration
- Promotional credit funds are not immediately withdrawable as certain terms & conditions apply
get started
securely through City Index’s
website
***CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
City Index is a leading provider of online trading services, specializing in Contracts for Difference (CFDs), forex and spread betting. With over 35 years of experience, City Index offers a wide range of tradable assets to cater to the needs of both individual and institutional traders.
The broker is available to traders from various countries around the world. Providing their services in multiple languages. The platform can be accessed in languages such as English, Spanish, German, French, Chinese, and Arabic, among others. This ensures that traders can navigate the platform comfortably and access all the necessary information in their preferred language.
City Index has offices in the U.K., Australia, and Singapore and is authorized by the following Tier-1 regulators: Australian Securities & Investment Commission (ASIC), Monetary Authority of Singapore (MAS) and the Financial Conduct Authority (FCA).
Best For
- Offers fixed and variable spreads + raw spreads in Australia
- Selection of contracts for difference
- Trusted broker owned by StoneX Group Inc.
- Spread betting available to UK clients
- CFD traders
- Over 13,500 markets to trade
- EUR/USD spreads as low as 0.0
- Up to 30:1 leverage and 80+ FX pairs
- Exclusive trading tools, including Performance analytics, SMART Signals, Trading Central and TradingView
- Segregated client fund and negative balance protection
- Trading platforms include MT4, web trader, TradingView and a mobile app
- Accounts include CFD & spread betting, corporate accounts, professional accounts, live market analysis, academy and shares – extended hours
- Tradable assets include forex, indices, shares, commodities and other markets such as bonds and ETFs
- A monthly inactivity fee of £12 is applied for accounts that are inactive for 12 months or more
- Forex spreads are higher for MT4
Identify the Most Profitable Period For You
While some periods may seem more appealing than others, the best time to trade forex will depend on a number of factors, such as your trading style, the pairs you are trading and your risk tolerance.
The most active times in the forex market are during the overlap of the major trading sessions, and if you are a short-term trader, you will want to trade during these times. However, if you are a longer-term trader (swing or position trader), you may find more profitable opportunities to trade outside of these times.
The optimal way to find the best time to trade forex for you is to work out what provides you with the most profitable trading opportunities. You can do that by tracking data and monitoring which hours of the day give you a higher percentage chance of success.
Frequently Asked Questions
Is it good to trade forex at night?
Whether it is good or bad to trade forex at night depends on various factors for each individual. For example, one trader may find more profitable opportunities during the Asian session compared to the European session.
Answer Link
What time should I wake up to trade forex?
If you are trading the New York session, it starts at 8 a.m., so it is important as a trader to be well prepared for the session ahead of the open, which means waking up well before the open.
Answer Link
What are the 4 trading sessions?
The four forex trading sessions are the Sydney, Tokyo, London, and New York sessions or Pacific, Asian, European and American.
Answer Link
The post Best Time to Trade Forex by Sam Boughedda, Stock Market Analyst appeared first on Benzinga. Visit Benzinga to get more great content like this.