The Best Time Of The Day To Trade Forex?

The great thing about forex trading is that the markets are open 24 hours a day during the week and you could trade the markets all day every day if you so wished. However if you've been trading for any length of time you will know that there are some periods of the day that are more volatile than others.

As well as times that are more volatile than others, there are also sessions that are easier to trade than others.

Let's start by discussing the most volatile period of the day. This is nearly always the period between 1.30 and 4.30PM UK time and most affects the major currency pairs, particularly the US dollar pairs.

Why? Well because not only is this the time when American traders are just beginning their trading day, but more importantly it's the time when the major economic data releases are announced, and these can often cause sharp movements in the dollar currencies.

So is this therefore the best time to trade if you're a forex trader?

Well if you're one of the very few people that are able to make consistent profits from trading the news, then yes it probably is the best time of the day to trade, but for most of us, this period is simply too volatile and unpredictable. These data releases can make a mockery of technical analysis so I personally don't really like to trade during this time.

The best time of the day to trade in my experience is the start of the European session which is around 8.00 to 12.00 UK time, although this could even be extended to include the hours between 6.00 and 8.00 as well because you often get some strong moves during this period as well.

Apart from a few economic announcements from the UK and other European countries, which usually do not have a major impact on the markets, this session is not only heavily traded but it's free of any major market moving announcements. Therefore it lends itself perfectly to technical analysis which is why so many traders, including myself, like to trade during this time.

Of course not everyone around the world can trade during this time due to time differences, but it is unquestionably the best time to trade the markets.

If you are based in Asia or Australia, or even the USA, then you could still make consistent profits from trading, but your best bet would probably be to trade the Yen-related pairs such as the GBP/JPY or the USD/JPY as the other major pairs such as the GBP/USD and EUR/USD are extremely quiet during the Asian session.

So to sum up, although you can potentially make profits at any time of the day, the best time of the day to trade in my experience is during the start of the European session because you get strong movements and trends and you don't have to worry about the market-moving US data releases that often occur later on in the day.

James Woolley runs a blog offering tips and strategies related to forex currency trading and a review of Forex Trading Machine.