By far, the best time to trade on the currency market is when it is the busiest and, as a result, has the most trades. When the market moves quickly, there are more chances for prices to go up or down. If the market is slow, you are probably wasting your time. Turn off your computer and go fishing.
The most currency transactions happen during London time, then New York time, and finally Tokyo time. So, London time is the centre of the world of currency trading.
What does this mean for the average forex trader, and when is the best time to trade the currency pair we want to trade?
Yes! First, we need to look at trade times that overlap.
Japanese traders start the forex market between 8:00 pm and 4:00 am EST. London traders start their day at 3:00 am EST and end at 11:00 am EST. The New York stock market opens at 8:00 a.m. EST and closes at 4:00 p.m.
If we want to trade currency pairs like EUR/USD and USD/GPB, we have to pay attention to when the trading times for these pairs overlap. So, the best time to trade the currency pair EUR/USD and USD/GPB is between 7:00 am and 11:00 am EST, when both markets for these currencies are most active. (i.e., when they're on top of each other).
Forex trading is a zero-sum game, so traders must do everything they can to get an edge over their competitors and change the odds in their favour. One of the things we can easily control is picking the best time to trade the currency pair we've chosen.
Forex day traders should also know that Mondays and Fridays are usually bad days to trade. What gives?
Research shows that Monday trading is usually slow because the market is trying to confirm or start a trend by taking small steps. Friday is also not a good day because so many trades end on that day.
CONCLUSION:
When trading in your chosen currency pair is most active is the best time to trade that pair. Most likely, Tuesday through Thursday are the best days to trade on the currency market. Best of luck with your business!
