WHEN NOT TO TRADE FOREX?

Everyone knows that the Forex market is open 24 hours a day, but this fact doesn‘t mean, that it is not active all this time! Forex trading money is made when the market is active (when traders are bidding on the prices). That’s why, it is crucial for you to learn about the most productive hours of the day and of the week for trading the forex!

As you know, there are three-four major trading sessions of the market: London, Sydney, US and Tokyo session. The busiest times are when the sessions overlap as traders can then purchase currencies from the different continents. As London involves many countries of the European Union, the Forex market of London is usually the most active. The US market comes next, so the time when the London session intersects with the US session usually provides the biggest returns. Expert traders consider 10 AM to be the best time as this is the period when the London market is preparing to close the trades and traders are getting ready to move to US market. This creates big swings in currency prices thus opening great opportunities for profit.

By the way, according to researches, the biggest movement in the four major currency pairs (EUR/USD, GBP/USD, USD/JPY, USD/CHF) is observed on Tuesdays and Wednesdays. Fridays are also busy, but only till 12:00 PM, and during the second half of the day the movements can be very unpredictable.

However, there are periods during which you mustnt trade, if you want to save your money and keep your nerves.

Let‘s check when the market is not active and you shouldn’t to open positions:

1. Friday afternoon and weekends.

2. Trading session closing time.

3. Important news events.

4. Bank holidays.

5. End of December.

6. Primetime TV events.

7. Asian sessions.

8. When you are angry and frustrated.

9. Overnight.

Remember, that an inactive market offers smaller movements of rates, thus smaller potential profits. Such market also comes with higher commissions for each trade due to decreased liquidity.

/materials from academia.edu/

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