You can trade currencies at any time of the night or day. Monday through Friday, the forex market never sleeps. Nevertheless, there are some times of day that are better than others for most traders.
Most traders prefer to get involved in the market at the busiest times of day. This is especially true of day traders and scalpers. They are looking for plenty of activity so that they can get in and out of a market in a short time and still make a good profit. It is less important for longer term traders, but if you plan to use day trading strategies at all you will need to know the busiest times for forex trading.
So which time slot has the most forex trading activity? The answer, not surprisingly, is the 3 hour period when it is business hours on both of the top two currency trading floors. These are London and New York.
Although the British pound is not the most heavily traded currency (it comes fourth after the US dollar, euro and yen) the London market is the most active. Most of the major European financial powers including Switzerland and Germany are within one hour time difference of London.
New York is of course the home of the US dollar, and it is the second busiest currency trading center. Eastern Canada is in a similar time zone. Business hours here are 8 am to 4 pm EST. London is five hours ahead, so at 8 am EST it is 1 pm in London and the trading day has three hours left to run.
Therefore, the busiest forex trading hours are 8 am to 11 am EST, which is 1 pm to 4 pm British time. Of course, this is not the only time that you can trade. If you are unable to get online at those times, you will certainly find other opportunities. However, it could be good to get as close as you can. For example, if you live in the eastern USA and cannot trade during New York business hours because you have a regular job, consider trading in the early morning before you leave for work. The London market opens at 3 am EST.
On the other hand if you are in Britain or continental Europe and cannot get online during business hours in your own country, the evening will be better for you because New York will still be open. The New York market closes at 9 pm British time, or 8 pm Central European Time.
For anyone just starting out with forex trading, it is best if you can get online during some of the busier times of day. Quiet times are not easier or less stressful. In fact, during times when there is very little activity in the market, or if you are tempted to trade a less common currency pair, you will find that price movements can be much more unpredictable. Spikes happen with frightening regularity and can knock out your stop losses, leading to many small losses. It is better to stay with the crowd and trade currencies during busier times.
Showing posts with label trade foreign currency. Show all posts
Showing posts with label trade foreign currency. Show all posts
Friday, February 5, 2010
Monday, October 5, 2009
Trade Foreign Currency: The Best Time To Trade
If you are serious about making money with forex trading, you will need to know the best time to trade foreign currency. And by the way if you are not serious about it, you probably should not be getting involved! Forex trading is not risk free and there are plenty of things that you need to know before you start trading for real.
Generally the best plan for a beginner is to get into the habit of trading during some of the busiest times. Do not look for quiet periods hoping to make a big break when nobody else is around. It just does not happen that way and you could be caught out. Better to go with the crowd at a time when you can be more sure of being matched at a good price for both your opening and closing deals.
So when are the busiest forex trading times? The answer is the overlap between the London and New York forex trading hours. London is actually the busiest currency trading floor, with New York second. London business hours are good for trading on the euro, British pound and Swiss franc, since most of the major countries using these currencies are within one hour time difference from Britain. New York of course is the home of the US dollar, the most traded currency, and the time zone also covers Canada.
Expressed in British time (the same as UTC in winter), trading starts in London at 8.00 am and finishes at 4 pm, while trading in New York starts at 1 pm UTC and finishes at 9 pm. Therefore the overlap is from 1 pm to 4 pm British time. Expressed in New York time (EST), the overlap is from 8 am to 11 am. That is when the forex market is busiest on practically every day.
Of course those hours may not be ideal for everybody. If you live in one of those time zones and want to trade foreign currency outside of normal business hours when you may be working another job, you will certainly have the opportunity. If you live in Europe you can trade in the evening when the New York market is still open, and if you live in the EST time zone you can trade in the early market when the London floor is already very active.
Also, if you trade cross pairs that do not involve the US dollar, you may find a busy time for that pair based on the business hours of their two countries. For example the AUD/JPY pair can be reasonably busy during the Asian session when Australian and Japanese business hours overlap. However, even on these pairs there is usually more activity if you can also overlap with US or British trading times.
Long term traders who may leave a trade open for several days or weeks will be less constrained by the peak trading times. For day traders, however, it is important to be able to slip in and out of a very busy market if you want to profit from forex scapling strategies. So it is also important to take into account how you plan to trade foreign currency.
Generally the best plan for a beginner is to get into the habit of trading during some of the busiest times. Do not look for quiet periods hoping to make a big break when nobody else is around. It just does not happen that way and you could be caught out. Better to go with the crowd at a time when you can be more sure of being matched at a good price for both your opening and closing deals.
So when are the busiest forex trading times? The answer is the overlap between the London and New York forex trading hours. London is actually the busiest currency trading floor, with New York second. London business hours are good for trading on the euro, British pound and Swiss franc, since most of the major countries using these currencies are within one hour time difference from Britain. New York of course is the home of the US dollar, the most traded currency, and the time zone also covers Canada.
Expressed in British time (the same as UTC in winter), trading starts in London at 8.00 am and finishes at 4 pm, while trading in New York starts at 1 pm UTC and finishes at 9 pm. Therefore the overlap is from 1 pm to 4 pm British time. Expressed in New York time (EST), the overlap is from 8 am to 11 am. That is when the forex market is busiest on practically every day.
Of course those hours may not be ideal for everybody. If you live in one of those time zones and want to trade foreign currency outside of normal business hours when you may be working another job, you will certainly have the opportunity. If you live in Europe you can trade in the evening when the New York market is still open, and if you live in the EST time zone you can trade in the early market when the London floor is already very active.
Also, if you trade cross pairs that do not involve the US dollar, you may find a busy time for that pair based on the business hours of their two countries. For example the AUD/JPY pair can be reasonably busy during the Asian session when Australian and Japanese business hours overlap. However, even on these pairs there is usually more activity if you can also overlap with US or British trading times.
Long term traders who may leave a trade open for several days or weeks will be less constrained by the peak trading times. For day traders, however, it is important to be able to slip in and out of a very busy market if you want to profit from forex scapling strategies. So it is also important to take into account how you plan to trade foreign currency.
Subscribe to:
Posts (Atom)
