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Best time of the day to trade forex?

Forex markets trade round the clock which gives traders many opportunities to trade and make profits regardless of where they live and what their actual time zone is. Some traders might find it best to trade in the UK session; others might find it best to trade the US session. Read more below to find out how to select your trading session. We will also give a suggestion on how to maximize your trading rebates, as here at FxRebateGurus we are all about rebates.

It is extremely important to keep in mind that markets behave differently depending on the time of the day.

 

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The Asian session

New Zealand is the first majour market to start trading every day, closely followed by Australia, Japan and China. The Asian session is thus the first period open for trading and generally runs between 11pm and 8am GMT.

As the first trading session to open after the weekend it is very likely that in the first few hours of trading we see some reaction to news that came out during the weekend. Besides news that came out during the weekend, news flow out of Asia and the fluctuations of Japanese and Chinese equities will be the main market movers during this period.

Generally speaking markets are quiet during the Asian session and most traders will focus mostly on AUD, NZD and JPY currency pairs. After the Asian session ends, the volatility for AUD and NZD currency pairs often drops sharply.

European session

Just as the Asian session starts winding down, the European trades come online. there is some overlap between the two markets, and the overlap time can provide some good trading opportunities. There is one more overlap during the trading day, trading activity increases significantly during both of these overlaps.

The London open is typically a very busy period and can see big moves in currencies, particularly GBP and EUR. There is also significant news flow out of Europe early in the morning and the first hour or two of trading can be very important for the rest of the trading day. The European session typically extends from 7am to 4pm GMT.

US session

When US markets open at 2.30pm GMT, forex markets usually see their most volatile period. Since the US is the world’s biggest economy by quite a margin, most of the world’s markets follow the US’s lead, and the US session is very important. During the overlap period of 1.30pm and 3.30pm GMT, many news events and economic releases are announced and this is typically the busiest time for markets. All of the major currencies trade heavily during this time, those are USD, EUR, GBP, CAD, AUD, NZD and JPY.

Strategies

Deciding on the right time to trade depends on your trading strategy. Many technical traders and scalpers prefer the quiet Asian markets since they are less susceptible to disruption from news flow. News traders on the other hand and those traders that thrive on volatility obviously prefer the busier US and European sessions, particularly the overlapping periods.

Since, as traders, we pay commissions every time we trade, it normally makes sense to play the busier periods as that gives the most opportunity to make money and earn lots of rebates. Generally the overlap times will give the most opportunity for quick in and out trades with low risk trades.

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