Forex trading is a lucrative business for those who know how to navigate the market effectively. One of the critical factors that can determine the success of your trades is timing. Knowing when to enter and exit trades can be the difference between making a profit and losing money.
You can learn about these through forex trading courses along with this comprehensive guide on forex trading hours and when to trade and when to stay away.
Understanding the Forex Market
Before we dive into the best times to trade forex, it’s essential to understand the forex market’s nature. The forex market is a decentralized platform where you can buy and sell trading currencies.
Unlike the stock market, the forex market is open throughout the whole day, for the whole five business days of the week. The forex market’s global nature means that it’s open at all times of the day, depending on where you are in the world.
The forex market operates through various trading sessions, which are based on the major financial centers’ time zones. These trading sessions are the Tokyo, London, and New York sessions.
What are the best times for Forex trading?
The forex market’s most active and liquid trading sessions are the London and New York sessions. The London market opens at as early as 3:00 am EST and closes at 12:00 PM EST. The New York market starts at 8:00 AM EST and closes at 5:00 PM EST. These two sessions overlap from 8:00 AM EST to 12:00 PM EST, making this the busiest time of day for forex trading.
During these sessions, traders can take advantage of high liquidity, tight spreads, and significant price movements.
The Tokyo session is the least volatile of the three sessions, and it opens at 7:00 PM EST and closes at 4:00 AM EST. While the Tokyo session may not provide the same opportunities as the London and New York sessions, it’s still an important trading session that traders should keep an eye on, especially if they’re trading the Japanese yen.
When to stay away from forex trading?
While the forex market is open 24 hours a day, five days a week, it’s not always the best time to trade. There are certain times when the market is less active, and price movements are slower, which can lead to less profitable trades.
The weekends are a time when traders should stay away from forex trading. The market is closed on Saturdays and Sundays, which means that there is little to no trading activity during this time. It’s also worth noting that Friday afternoons tend to be less active as traders start to wind down for the weekend.
Another time when traders should stay away from forex trading is during major holidays. The market tends to be less liquid during these times, which can lead to wider spreads and less favorable trading conditions.
Using these tips, you can begin investing in forex trading with the right guidance from forex trading courses as well.
So, what are you waiting for?
Learn the right trading skills and start investing right away!