Blog

The forex market is an interbank market, with large banks acting as market makers, offering their own prices. This means there are fewer trading restrictions, such as when and where you can trade, unlike stock market trading hours, where traders are restricted to a weekday timetable with specific hours. During the day is when most political and other economic events will be going on and affecting Xero (software) the currency prices. It is also when the most traders will be buying and selling currencies, so this is often the most active and volatile period for trading forex. Day trading is defined as opening and closing a position within a single trading session. Most day traders make use of leverage and short-term trading strategies to take advantage of small price movements throughout the day.

The liquid major pair in the forex market is EUR/USD – which will see you trade the exchange rate between the euro and US dollar. Other popular major pairs include GBP/USD, USD/JPY, and USD/CAD. All of the aforementioned pairs have a number of core characteristics that are highly suited for newbie traders. The next day trading forex strategy to consider as a newbie is that of bankroll management. In fact, this will ensure that you keep your trading stakes sensible and thus – avoid burning through your brokerage account balance. So now that we have covered the best technical indicators to use when day trading forex – we can now dive into strategies.

The First And Last Day Of The Week

If so, below we cover the main benefits of day trading forex from the comfort of your home. Unlike the traditional stock markets, the forex trading industry is accessible 24 hours per day, 7 days per week. However, if you attempt to buy and sell currencies over the weekend, you will find that trading volumes are much lower. This strategy will first require you to select a maximum stake percentage.

Important Trading Times

And this is the time when most of the traders open and close the most profitable trades. Read on to learn about the best time of the day to trade forex in East Africa. The London session opens at 8am UK time and accounts for roughly 35% of all forex transactions (estimated £2.1 trillion daily). Due to the large volume of trading during the London session, there are likely to be lower spreads as liquidity is higher. However, the London session is also subject to high volatility, often making it the best to trade the major currency pairs, which offer reduced spreads due to the high volume of trades. The time of day at which you trade stocks can drastically affect your profitability, since each hour of the trading day has a particular tendency.

• Yet, these are not the only factors that have been driving the growth in forex algorithmic trading.
• Likewise, prices tend to drop in September and then go up again a month later.
• Yes – the foreign exchange market is arguably the best asset class to target as a day trader.
• Your time commitment is limited to only the hours with the greatest profit potential, giving you the rest of day to focus on other endeavors.
• During the overlap of the London and New York sessions, you can see how price made a very big move.

However, this isn’t the most effective way of entering a forex trade. Trading journals are used by forex day traders of all shapes, sizes, and skillsets. In a nutshell, this will see best time of day to trade forex you keep a log of your trading endeavours. Not only in terms of what positions you places and whether this resulted in a profit or loss – but your reasoning behind each trade.

When Do The Forex Market Sessions Overlap?

Compared to the London and New York sessions, the Asian session usually experiences less volatility in the market. However, some good currency moves may be observed every now and then. Abundant liquidity makes it possible for traders to enter and exit the market with ease. With the goal of a consistent trading approach, day traders often seek certain characteristics when targeting trade opportunities. Because you are new to forex trading, you would be wise to trade long-term and not short-term.

If you’re a novice in this trading industry, it’s best to stick with major pairs. If, however, you have a bit of experience and wish to target larger profit margins, then minors or even exotics might be more suitable. Forex operates around the clock – so you can trade at any time of your choosing.

If You Prefer Trading Morning Hours To Noon 5am To 12pm

Knowing when to trade, and when not to, is critical as a trader. It will help keep your capital safe when conditions are volatile or markets are illiquid and capitalize when the time is right. Know that just because the market is moving, it doesn’t mean you have to trade it. The little-known truth is that 99% of the volatility you see every single day is just a trap waiting for the unsuspecting trader.

Even the price movement is a lot better than the previous session. When the New York session opens, you can see the volume rising even more. During the overlap of the London and New York sessions, you can see how price made a very big move. And if you compare this movement with the Asian best time of day to trade forex Session movement, you can easily tell that the price action during the overlap is much better, and give some of the best trading opportunities. One thing to remember is that high volatility provides you with better opportunities for profit, but it does not guarantee the profit itself.

New York Session

Forex is an over-the-counter product, hence there is no central physical exchange where the currencies can be traded, unlike shares that are traded on various stock exchanges. The best time to trade will depend a lot on your trading strategy and lifestyle. For most people who are trading as a hobby or money-making venture on the side, this will be throughout the day and early evening. With the many trading platforms available, this has made it easier than ever to trade around the clock and on the go, on smartphones and tablets for example. With the markets open 24 hours a day, any time is a good time to trade, but there are times that are still better than others.

Liquidity occurs when there is high price movements due to increased trade volumes. If you do a trade at this time, your positions will move very quickly. You can either make huge profits or huge losses in a few minutes. With this in mind, be sure to remain flexible at all times when day trading forex. The best online brokers allow you to trade assets with leverage – meaning you can increase the value of your stake. With that said, regulated brokers are capped in how much leverage they can offer retail clients.

However, as the price action on the right-hand side of the chart clearly shows, after the trade was stopped out, price, in fact, turned sharply upward. If the trader hadn’t been stopped out, he could have realized a very nice profit. Many novice traders make the mistake of believing that risk management means nothing more than putting stop-loss orders very close to their trade entry point. His simple market analysis requires nothing more than an ordinary candlestick chart. Making money trading currency pairs requires you identify a time interval that best suits your trading strategy.

Reviewed by: Ian Sherr