Due to the overlap of trading hours in the US and Europe, the liquidity in the market will be very huge during this time, which allows you to trade any currency pair, but it is best to trade more common currency pairs, to avoid those weird trends and Unfamiliar currency pair. At the same time, because the US dollar is on the other side of most transactions, everyone will pay close attention to US economic data, monetary policy, etc., they will see whether the data is better or worse than expected, because this may cause dramatic fluctuations in the market, the US dollar There will be huge shocks after the release of major data.
Begin to wonder when exactly does each session start? We will answer your questions in the next lesson.
Trading hours overlap
Quick surprise quiz! When is the highest rating of the day? If you say it is prime time, then congratulations, you got it right!
What about trading hours? Well, just like watching TV, high liquidity means having more people participating in the market.
Logically, you would think that this happened when the two trading sessions overlapped. If you think so, you are only half right. Let’s discuss some of the characteristics of overlapping periods of trading hours and see why.
There are several reasons for the very low liquidity during this period. Under normal circumstances, the Asian market will not fluctuate greatly, because once entering the afternoon, the Asian market will begin to enter a stagnation state.
Since European traders are just beginning to enter their offices, the lack of liquidity in the market will only make traders feel boring.
This is the ideal time for traders to calm their minds, they can relax or find potential trading leads for London and New York.
London-New York trading hours overlap
This time is when the market really starts! This time is the busiest time of the day, because traders from the two major financial centers of London and New York are getting busy.
Also during this time, we were able to see some huge fluctuations in the market, especially when the economic data of the United States and Canada were released. Of course, the market will also be affected by news factors from the end of Europe.
If the market established a trend during the European session, most of the time we will see the trend continue in the New York session because traders from New York intend to enter the market and establish their positions after reviewing the earlier market conditions.
However, you should note that at the end of European time, as some European traders choose to close their positions, this may result in some fluctuations in the market during midday New York time.
Best trading time of the week
Now we know that compared to other trading hours, the London time period is the busiest time of the day, but within a week, there are some specific days where the market will be relatively active.
The following table is the range of average fluctuation points of each major currency pair on each day within a week:
As shown in the figure above, the middle of the week is likely to be the best trading time, and most transactions will be conducted during this time.
Friday’s market conditions will be busier before 12 noon EST, then the market will appear quite quiet, and this period will continue until the market closes at 5 pm EST. This also means that the week of trading in the foreign exchange market is over.
Weekends always arrive early, right? Haha.
Now, we have learned about the busiest time of the week. The busiest time is also the best trading time because it gives traders a higher chance of winning.
Manage your time wisely
Unless you are the actor Edward Cullen in the movie “Twilight”, he can do 24 hours without sleeping, otherwise you can not trade in all trading hours. Even if you can, why do you want this? Although the foreign exchange market is open 24 hours, this does not mean that you have to trade at all times.
In addition, sleep is an integral part of a healthy life! You need to get enough sleep so that you can carry out your daily life and have the opportunity to become a king in the foreign exchange market.
Every trader should learn when to trade.
In fact, this is not enough.
While learning how to trade, every trader should also learn when not to be able to trade.
Knowing the best trading time and the time that is not conducive to trading can help you reduce unnecessary losses.
Here is a guide to the best and worst trading hours:
Best trading time:
When two trading sessions overlap. In addition, major events in the market, economic data, and speeches by important central bank or government officials will also cause volatility in the market and cause directional fluctuations in the market. You must be aware of the major data or major events that will be announced on the economic calendar during the day.
The European session is the busiest of the three trading sessions.
The mid-week is usually the busiest time, because most currency pairs have the largest fluctuation range during this time.
Worst trading hours:
★ Sunday-almost everyone is sleeping or enjoying the weekend
★ Friday-New York time, Friday afternoon liquidity is scarce
★ Holidays-everyone is resting
★ Before the announcement of major events-the market is likely to be contrary to your expectations
★ When American Idol, NBA Finals, Super Bowl and other cultural and sports programs are broadcast
Difficult to trade in the best trading hours? do not worry. You can always be a range trader or a long-term trader. We will explain to you later. At the same time, let us see how to make money in the foreign exchange market. Are you excited? now it’s right.