Best Time to Trade Forex
Many traders from all markets often wonder when is the best time to trade. There are three popular trading sessions, the European session, the US session and the Asian session. In order to determine what the best time for trading is we must first understand the trading activity in each session.
The Asian session is tends to be the least active session although it may not necessarily be the case for every trading day. Economic data from Japan, Australia and New Zealand are often released during the Asian session, which adds to the volatility in numerous currency pairs and crosses such as EURJPY, AUDUSD, NZDUSD etc.
Based on our views the Asian session may provide intaday setups that are based on the 4hr chart ahead of the European and US sessions. Scalpers may may dislike the Asian session but for day traders many entries our are often provided. We do not issue our forex signals during the Asian session as we have traders worldwide with different time zones. If trading during the Asian session is suitable, carrying your analysis on the 4hr chart may be appropriate.
Economic data from Europe and the United Kingdom (UK) are often released during the European session and is among the most active trading sessions. Scalpers may favorite the European session due to its volatility and the high liquidity ensures the spread is relatively tight during these hours.
Intraday entries across multiple time frames such as 15min, 30min, 60min and 4-hour may materialize during the European session. The US is just as active as the US session, however, once London closes at 16:00 (UK time) the Forex market tends to be less volatile but as noted earlier, this does not apply for every day. Once we are aware of the trading sessions we must also pay attention to the trading days themselves.
Mondays are often quiet while Fridays tend to be quite volatile. In addition, the last day of the month is often a volatile day regardless of the day it falls (Monday, Tuesday, Wednesday etc.).
Your Forex Strategy
The best time to trade now depends on your trading strategy. If you wish scalp in the Forex market, targeting 5 – 15 pips, the European and the US session would be the most appropriate. Scalpers often prefer Euro Dollar due to the tight spread it offers.
For day traders, if your trading strategy is based on the 5min, 15min, 30min, 60min and / or 4hr chart the European and US sessions would be the most adequate sessions. The 4hr chart though can be traded in all the popular sessions. All this applies for strategies that are based on technical analysis. Fundamental analysis does not require a chart as the entry in the market is confirmed based on events that take place outside of the technical end of the market.
In our forex trade alerts we focus mainly on longer time frames such as the daily and weekly charts. Longer time frames contain all the intraday noise and often produce a larger profit when compared to intraday time frames. The stop loss order is often greater as well, which is why risk reward ratio is essential. Exercising a 70 pips stop for 100 pips take profit is a weak risk reward ratio for example.
Your trading strategy is therefore more important than the trading sessions. You must determine your approach to the market first and then simply adapting your style to the market. The Forex market is active 24 hours a day from Monday – Friday.
We are strongly against Expert Advisors (EA’s) as auto trading is often recipe for disaster. As soon as market conditions change, if the EA is not adjusted it may lead to great losses. Mirror trading or social trading is quite similar, which is why our forex signals allow each trader to assess the risk before executing the trade in the market.