The currency markets are open 24 hours a day but which times are the best ones, to enter your trading signals? There I a lot of information on this online but most of it is based on myths about trading Forex. Let's look at the best times to trade currencies in more detail.
Lets look at the common wisdom of when to trade Forex pairs and execute your trading signals but a lot of the info is based on false assumptions about currency price movement.
Highest Volume and Volatility in Currencies
You will read a lot of info on you should trade when volumes are at there highest in global currency markets which are also the periods when volatility can be high and the sessions which are normally given, as being the best, with the above two factors in mind are - the open of the London market ( the world's biggest foreign exchange centre) and the overlap between the London market and the US Market open.
Volume and liquidity of currency pairs, are high in these periods and volatility can also be high. My view though is you should be trading when, the levels on your charts are right and offering you the best risk reward in terms of trading?
Not all my trades are done at the market, I will use open orders in the market and just wait for them to be triggered. Sure I trade in the most liquid times most of the time (I trade mostly US close) which I will discuss in more detail in a moment but will have my open order, trading signals triggered at any time there hit and this can be any the Forex market is open and on any day.
In addition, not all volatile FX price moves occur in high volume periods of trading, they can also occur in other time frames when liquidity is not so high. For example, when you have thin volumes price spikes are even more likely, as they can exaggerate price spikes.
The idea you should only transact trades, at the high volume periods of trading goes with the myth that short term trading makes money. The idea is that with day trading and scalping systems you can take advantage of short term swings in the heaviest periods of trading but we have looked at the logic of this,numerous times on this site and shown this trading logic is false and doesn't work.
Most successful traders are, either swing trading or trend following. This means, holding positions to a few days for swing traders and holding trades for a week upwards for trend followers.
There are two points to keep in mind, when considering the best times to trade and this depends on the trading strategy you are using.
Best Times to Trade Forex: Open and Market Orders
You can do orders at the market or you can enter open orders.
If you are trading long term you will normally have a level of support and resistance in mind which you want to trade against and enter a trading order and these orders are simply put in forgotten about and executed whenever the price action hits the price you are looking for.
In terms of trading at a certain time of day, I think that you should pick either the London open or New York close. These are arguably the times when the global trading day begins and ends. My preference has always been the US close in terms of working out my trading strategy and executing at the market trading orders. I do however know traders who use mostly the London open and also, some who use the overlap of the two trading periods as their main periods of trading. So long as you are consistent with your time when trading market orders, I don't think there is an advantage of one specific time over another of the three popular times above.
No matter where you live, you can trade one of the times mentioned above and fit it in around your normal schedule.
Don't worry to much about the best time to trade Forex – pick a time and be consistent for your analysis of your charts and just trade the time consistently. Also, get used to looking at chart levels – its the levels you want to see hold or break which should be the trigger for you trading signal not the time there entered in the market.
Most of the advice online about the best times to trade your signals is based on day trading methodology or the mistaken logic that high volatility goes with high volumes which is not true. Focus on your charts and trade the market when your price levels are hit and don't pay to much attention to the times which there put in the market and you will do just fine.