Because of the many different time zones in the world, Forex trading is available for 24 hours, 5 days a week from Monday to Friday. Best of all, you don’t have to give up sleep to be a highly profitable trader. Here’s how.
Forex Market Hours versus Stock Exchanges
Unlike trading stocks, where the market is open only few hours a day, you can open & close Forex trades whenever you spot an opportunity. A retail trader in the stock market will be stuck with his positions if it is after the closing bell, but a Forex trader can wake up in the middle of the night, see opportunity and capitalize upon it.
The magic happens, when Forex market hours overlap. The absolute best time to trade for volatility is at the end of the trading day in Europe and the beginning in the US. That’s when trading volumes are the highest, because majority of biggest forex market players are actively trading at this time. The more traders there are speculating in the market the more aggressively the price can/will move. This movement in the price ultimately decides your profit potential. Make sure your money is where the action is.
Best Days Of The Week for Trading
Trading is generally slower on Monday than other days, as businesses and banks return to work from the weekend. The most active and liquid days are the middle of the week from Tuesday to Thursday. Remember that you don’t have to trade every session. Doing that is both unsustainable and certainly opposite of what highly successful traders would do. Instead choose the time that suits you best and trade consistently.
1. Avoid Trading On Fridays
Fridays typically are quieter days. This is due to major market participants like banks and hedge funds closing their positions before the weekend. Remember the news feed is ongoing and a chance to make money could happen at any moment of the day or night.
2. Don’t Leave Trades Opened Overnight
Be aware that if you leave a position open overnight, many best forex brokers will charge you a fee for the privilege. Brokers fees eat into your profits, so make sure you read their policy before you leave an overnight trade position open.
3. You’re Under Great Risk When Angry Or Upset
A simple rule to follow is to not trade when you are over excited or angry. If you trade during times of raised emotion you are much more prone to errors and biases. Trading is much more likely to be profitable if you are calm and measured.
4. Avoid Trading On Holidays
Banks and Hedge Funds traders also need a rest from money making. Holiday periods can be very thin on the market. Thin trading volumes can sometimes cause big moves unexpectedly, so don’t give up entirely on trading around the holidays – just practice and develop your skills on a real-time trading simulator!
5. Last But Not Least – Beware Of The Weekends
In May 2017, the French election was held on a Sunday, when markets were closed. The Euro positive news of a Emmanuel Macron victory caused EUR/USD to “gap up” when the market opened on Monday. It means the price moved so dramatically and quickly up that there was a space on the chart between the new price and the old price point. If you were short (selling) the pair you could have suffered a large loss as your stop-loss would not trigger prcisely.