Best Times of Day to Trade Forex

Best Times of Day to Trade Forex: Lesson No 20

Let me ask you a quick question. When do more people watch TV, have you ever wondered? It is indeed prime time.

So, how does this relate to our Forex trading sessions?

In forex, our ‘ratings’ or liquidity are at their highest when more traders are present, much as TV ratings rise when more people watch.

Now, when is the best time to trade Forex?

You may think it occurs when two trading sessions overlap. That makes logic, but it is only halfway there.

Let’s look at the characteristics of these overlap sessions to see why.”

Tokyo – London Overlap

Let’s discuss what happens throughout the Asian trading session. It’s similar to a calm town. Not much is going on since, well, the Asian session isn’t known for major changes. It’s more like the calm before the storm.

Things remain quite calm during the day. European traders are just getting settled in at their desks, and the market is a bit of a snoozefest. It’s so slow that you may hear some Zzzzzzz.

So, what can you do during this downtime? It’s an ideal time to take a break, play some putt-putt golf, or unofficially explore for potential trades that may arise during the busier London and New York sessions.

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London – New York Overlap

Let us understand about the ideal times to trade. According to FXLIQUIDITY, a forex market analysis tool, the best time for trading is between 10 a.m. and 3 p.m. London time. Check out our Forex Market Hours tool to see when it is in your location.

This is when things become real. Around this time, traders prepare for some major action. It’s the busiest time of day because traders from the big cities of London and New York are competing.

Expect a few important changes, especially if important information from the United States and Canada comes. Breaking news from Europe late at night might also cause confusion.

If signals arise from the European session, they could continue when American traders participate, having caught up on the day’s events.

A quick reminder that the WM/Refinitiv Spot Benchmark Rate (standard foreign exchange rates used globally by various financial institutions, corporations, and individuals) commonly referred to as the “London fix,” is determined at 4 PM London time. This rate is fundamental for routine cash exchanges.

The currency exchange rates that banks establish are based on this rate, which has an impact on corporate foreign exchange operations. Before the fixing period, there may be an increase in trading activity.

And who knows, maybe some European traders are finishing up for the day, creating a little disturbance in the market just before US twelve o’clock. Thus, maintain your focus throughout these moments, and you’ll be an expert trader.

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