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Best Time of Day to Day Trade Forex

Discussion in 'Forex Discussions' started by painofhell, Aug 31, 2015.

  1. painofhell

    painofhell Content Contributor

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    The best time to day trade the forex market is dependent on the forex pair you are trading; certain pairs are more heavily traded at different times around the globe based on which markets are open. For simplicity, we will look at the best time to day trade popular currency pairs, such as the EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, NZD/USD and USD/CHF. I will also show you how to find the best time to day trade other forex pairs not covered here.

    Open Major Markets Means Increased Action

    As a basic guideline, forex pairs are most active when one or both of the markets associated with the pair are open for business. For example, the EUR/USD is most active when European banks and/or when US banks are open for business. Exact times of heightened volatility will be addressed shortly. If neither the European banks or US banks are open, then the EUR/USD will have less transactions occurring and will be “quieter.” The USD/JPY will be most active when Japanese banks and markets are open, or when the US banks and markets are open. When neither market is open, the USD/JPY will be quieter.

    Here are the market hours for major markets around the world.

    Forex Market Hours in GMT
    [​IMG]

    Forex Market Hours in EST (New York)
    [​IMG]

    During the week there is always a market open somewhere, allowing you trade 24-hours a day.

    (If you get lost converting all the time zones and figuring out which market is open and when, there is a great little tool which shows current times in different time zones as well as market hours for different time zones: forex market hours).

    Your Day Trading Style

    The best time of day to day trade forex will vary depending on what type of strategy you trade. While major markets are open, popular trading pairs, like those listed above, will tend to have trends lasting an hour or more and moderate to high volatility. This will favor trend traders or traders seeking volatility. Traders who utilize a range trading strategy or prefer less volatility will likely find the quieter times of day more suited to their day trading style.

    Below I discuss the most active and volatile trading times in each forex pair, and therefore the best time of day to day trade forex if you are an active trader seeking volatility and trending opportunities.

    If you are situated in a part of the globe where trading during these times isn’t feasible, utilize a range trading strategy or prefer less volatility, there is a great article by David Rodriguez on when and how to trade during “quieter times”. His article, When is the Best Time of Day to Trade Forex? is centered around “late US, Asian or early European trading sessions – essentially 2 PM to 6 AM Eastern Time (New York), which is 7 PM to 11 AM UK time.”

    Since I am trend trader, I tend to focus on higher volatility times, which typically occur during the mid-to-late European session and early US session–or between approximately 1 AM and 11 AM Eastern Time.

    Here is the best time of day to day trade forex–if you are seeking volatility and trends– based on each currency pair’s individual characteristics.

    Best Times to Day Trade Forex…

    The charts below show the hourly volatility of each pair, showcasing which times of the day are best for day trading forex. All charts below are based on a 30 week average. While volatility changes over time, the times of day when the market is most active is not likely to significantly change over time.

    Times listed are are GMT, subtract 4 hours to get the corresponding EST time.

    Best Time of Day to Day Trade Forex – EUR/USD, GBP/USD and USD/CHF

    These are all European currencies traded relative to USD, and therefore are most active at similar times.
    [​IMG]

    The EUR/USD is most active between 0700 and 1600 GMT. That is 0300 to 1200 EST. While this is an active time overall, the most active time is between 1200 and 1500 GMT (0800 and 1100 EST), so if you only have a few hours to trade, start and stop trading at these times respectively.

    [​IMG]

    The GBP/USD is most active between 0700 and 1600 GMT. That is 0300 to 1200 EST. While this is an active time overall, the most active time is between 1200 and 1500 GMT (0800 and 1100 EST), so if you only have a few hours to trade, start and stop trading at these times respectively. The hour from 0800 to 0900 GMT is also quite active.

    [​IMG]
    USD/CHF is also most active between 0700 and 1600 GMT. That is 0300 to 1200 EST. While this is an active time overall, the most active time is between 1200 and 1500 GMT (0800 and 1100 EST), so if you only have a few hours to trade, start and stop trading at these times respectively.


    Best Time of Day to Day Trade Forex – USD/JPY

    Since Japanese and US market are open at different times, the most active times of the day are spread out.
    [​IMG]

    The USD/JPY is most active between 1200 to 1600 GMT. There are some other hours which have decent volatility, but if you only have a few hours to trade, do it between 1200 and 1600.

    Best Time of Day to Day Trade Forex – USD/CAD

    Canada is situated above the US geographically, therefore, these country’s markets are open at the same time.
    [​IMG]

    The most active time to trade the USD/CAD is between 1200 and 1600 GMT (0800 and 1200 EST).

    Best Time of Day to Day Trade Forex – AUD/USD and NZD/USD

    Australia and New Zealand share some economic similarities and geographical proximity, and therefore the AUDUSD and NZDUSD experience similar trading conditions during the day.

    audusd hourly volatility

    nzdusd hourly volatility

    The AUD/USD and NZD/USD experience increased volatility between 2400 and 0200 GMT, 0600 to 0800 GMT and then the most active part of the day is between 1200 and 1500 GMT.

    Best Time of Day to Day Trade Forex – Other Forex Pairs

    To figure out the best time to trade other forex pairs, go to the Forex Daily Statistics page and under “Forex volatility” click on any forex pair to see a chart like the ones shown above.

    Locate the most active or quiet time, depending on your strategy, to find the best time to day trade that pair. If you trade based on trends and volatility, look for periods of increased volatility or “spikes” on the charts. If you are prefer ranging a strategy or quieter market, look for times of decreased volatility.
     
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