The important Forex trading sessions
Yes, the market is open around-the-clock, but being open is not the same as being active. Forex trading can be profitable whether the market is rising or falling, but the ideal times to trade are when the markets are active. Your transaction will not succeed if the markets are not moving at all.
1. London & New York Overlap
Since London and New York are the two biggest financial hubs in the world, these trading sessions are when Forex traders are busiest throughout the day. Along with the publishing of European news during this time, economic and political news during this period can also trigger significant market movements. In essence, this is the time when the most money is coming in and going out of the market, making it ideal for traders to profit from volatility.
2. Sydney & Tokyo
The Sydney & Tokyo overlap is the other very liquid trading session. The Japanese Yen pairs will be reasonably active at this time, followed by the Australian and New Zealand dollar pairs. Retail traders should invest now while money is pouring in from Asian and Oceanic traders, especially if you are a night owl.
BUT use caution if you are dealing with a UK broker; around this period, spreads tend to rise as brokers close along with UK banks. This indicates that there will be less liquidity at this time. So, if you wish to trade at this time, it would be advisable to register with a Japanese broker.
3. Monday - Thursday
Many traders are aware that great liquidity and cheap spread are provided by trading session overlaps. Forex traders overlook the fact that some days of the week have higher liquidity levels for trading.
Trading on Friday typically has less liquidity than it does between Monday and Thursday.
When not to trade
- Less traders would be present while popular events were taking place. the World Cup final or bonfire night, for instance.
- amid breaking news. The reason for this is that trading on news is a novice approach to trade fundamentally; real fundamental traders examine economic reports on a daily, weekly, monthly, and even annual basis to determine a country's economic path. For retail traders, the LogicStrategy makes this simple.
- Less trades are opened over the holidays when individuals are on vacation at the beaches.
- The bulk of bank traders spend Sundays sleeping and taking a break, whereas the majority of retail traders and the general public prefer to unwind.