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What is the Best Time to Trade?

Image of a freestanding traditional alarm clock on a desk next to a laptop, a pen pot and a pair of glasses. The time shows just after 12 o'clock

The Forex market operates 24 hours a day from Monday to Friday, but its activity levels vary depending on the time of day and the trading session. As we’ve seen in our previous blog, there are three main sessions: Asian, European, and North American. Each of these sessions has its own characteristics, which its major financial centers influence. There are several factors that can influence Forex market activity, which can help you to determine the best time to trade for you.

Major Sessions

Liquidity and volatility are generally higher during the European and North American Sessions. Therefore, it is advisable to focus your trading activities during these sessions.

Overlapping Sessions

There are times when trading sessions overlap each other. The Asian and European Sessions overlap from 7am to 8am GMT, while the European and North American Sessions overlap from 12pm to 4pm GMT. These overlapping periods are when trading activity and volatility are at their highest, providing the best opportunities for traders.

The best opportunities during these overlaps are where the pair has currency found in both locations of the crossover. For example, GBP/USD will have its greatest trading volume during the crossover of the European and North American Sessions. When there is increased trading activity in a specific currency pair, it can provide traders with an edge to make a profit.

Economic Data Releases

Large institutions such as investment banks usually publish economic data and are most active at the start of each trading session.  These economic announcements can cause fluctuations in the market, particularly during the North American session, when significant US economic data is released. Make sure you stay informed about scheduled economic events and data releases that could have an impact on currency pairs, using an economic calendar.

Market Volatility

Some traders find high volatility preferable, as it frequently results in significant price fluctuations and greater potential profits. If you excel in a fast-paced environment and can manage risk effectively, trading during these volatile periods, such as the European/North American overlap, could be an ideal option for you.

Find the Best Time For You

Ultimately, it’s important to find a time that is best for you. When choosing, you should consider your trading style, strategy, and what fits best with your personal schedule.

If you thrive in a fast-paced environment, trading in the European/North American overlap may be the best time for you, as liquidity and volatility are typically higher there. But if you prefer a quieter session with less volatility, the Asian Session would be best.

It is important to keep in mind your trading strategy and goals when deciding on the best time to trade. Day traders typically prefer to trade during overlapping sessions since the higher volatility and liquidity provide more trading opportunities. Swing traders may also seek opportunities during these times, but they may prefer to observe price movements during the Asian Session for potential setups that could develop over the next few days.

In conclusion, the best time to trade Forex depends on various factors and it is not a one size fits all. Consider your strategy, personal preferences and the differences between trading different sessions. Always ensure you have a strong Risk Management strategy [link to risk management blog] in place, stay informed about the markets and be patient.

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