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Best Time To Trade Forex – There Are Optimal Times And Then 5 Times To Avoid!

In terms of day trading, it is a well-published preference amongst many traders that the overlapping hours of the UK and US markets (London/New York) provide the best time to trade forex as a result of the higher liquidity and trading activity during this time.  Many experienced traders believe that the market is more efficient during times of high activity, thus providing a better opportunity for scalping and turning a trading profit.

There are other times of overlapping markets (Sydney/Tokyo and Tokyo/London), but these are less pronounced in terms of trading activity than the overlapping London/New York session.

The above summary is quite easy to understand and most automated systems and trading signals can incorporate volume based analysis that will compensate for these changes in market activity and trade accordingly (or provide appropriate triggers).  A day trading strategy should thus take volume and general market trading activity into account, as the best time to trade forex is during these high-volume sessions.  Maximising profits is the day-trader’s only concern.  Forex trading is only measured against one variable:  Profits.  Nothing else.  There is no making friends, being nice or charity in forex trading.  Profits are your only concern.

Thus, trading high-volume periods can certainly help with getting the most profits from the market.

We have quickly gone through a scenario that is the best to trade forex. But which times should be avoided?  This is as much a relevant question as asking which times are the best to trade forex.

In my experience, here are 5 times that can increase the risk of losing on trades, under normal trading circumstances, using a “normal” trading system:

  • Market openings: When markets open, participants generally digest relevant information that might have an impact on currency pairs.  Critical economic and social news have a massive bearing on the four major currency pairs.  As such, the first hour of a market opening should be avoided until the market settles and a clearer sentiment can be established.
  • Public holidays:  Avoid trading markets when there is a public holiday in one of the four major markets.  The market is less efficient as all participants are not present in the market.
  • Friday afternoons:  This sound silly, but do not try and squeeze a quick deal from the market on a Friday afternoon.  These trades are generally emotionally driven and lead to rash decisions.  Avoid!
  • Economic data releases:  When crucial economic data is released (such is US unemployment statistics, known as non-farm payroll data), the markets can have massive knee-jerk reactions.  A lot of money can be made or (even worse) lost during these short sessions.  These data releases are times better avoided if you follow a strategy of making consistent profits.
  • Gap risks:  Gaps can occur under many circumstances, but mostly relate to the conditions above, where the price movement is “gapped”, i.e. price action from one period to the next is big and no trades occur in between.  The risk is that your stop-loss will not even be triggered if a gap occurs against your trading direction.

My advice is to avoid “high-risk” trading times and stick to one of the sessions that are considered to be the best time to trade forex.  You only want profits as a forex trader, but this means you should use a proper trading system.  A proper system has capital preservation as one of its key cornerstones – if you want to trade high-risk times, better go to a casino as there are no guarantees. Unless you are professional trader and have appropriate systems to cater for these conditions.

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I am a Chartered Accountant, forex and stock market trader, business owner and property investor.  Finding profitable forex trading systems and strategies to benefit the average person on the street is my passion as forex trading is a very accessible means of earning additional income.  I endeavour to provide good, honest and value-add articles and posts on forex trading in general.

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