Best time to trade Forex? Is that even a question? Do we have best times to trade Forex?

Try to think of yourself as a pirate who has just discovered a map or a piece of parchment that can guide you to the proper treasure chest filled with gold. But there is a hitch, and it is that you can only mine for the treasure at a particular time. A hole too deep will disappear, hole too shallow will also disappear. 

Therefore, in the realm of Forex trading, a signal when to “dig” or trade is the equivalent of having that map to follow. Timing also determines by what means one is going to trade: late at night, early in the morning, during the day, at mid-noon, or dusk can either make you ‘strike gold’ or ‘go home empty handed’ This article is your map to navigate toward the horizon of increased trading risk – that is, toward the best trading sessions for Forex. Are you prepared for the answer when is it safe to look for that buried treasure?

What Does “Volatile” Mean?

Let us begin with an idea of what it means to be ‘volatile.’ Think of a toy car; this one in particular tends to move quickly and can accelerate, decelerate, and turn sharply. It is so uncertain you never know with which move it is going to surprise you. That’s what it means for something to be volatile: a characteristic that defines it as capable of shifting in a highly unpredictable manner in a short period.

In Forex, volatility is like that toy car. The price of currencies is also quite volatile and can flicker as to its value and even by some fractions of a cent within seconds. Fluctuations refer to the changes in the value of a currency that is considered either good or bad depending on the trader’s stand at a given time.

What Are “Trading Sessions”?

Now let’s discuss about the “Trading Sessions” If you consider the globe as a playground every single day is a playtime or rather trading session. It may take some time for different kids (or countries) to arrive at the play; that is, they initiate different games at different times. When the kids in a particular lot finish playing, a new group of kids replaces them. Playtimes are much like trading sessions in Forex, where the playtimes correspond to the availability of the play.

The foreign exchange market is active on a round-the-clock basis because when it is day in one part of the world, it is night in the other part of the world. In as much as everyone is awake and on the move all through the playground, swapping, each hour is not the same; Some hours are correspondingly rather congested more by the traders than others.

• Asian Session: This session commences as soon as Tokyo wakes up to trade and commences its working day. It is still early, they are having their first meeting of the day.
• European Session: This is the time when London wakes up from its business sleep. That is one of the periods when there is much traffic because many traders operate.
• American Session: This session is open when New York opens. It is also very active, especially during the European session and during the transition from it.

When Is the Most Volatile Trading Session?

As you can see, the Forex market is most vibrant during the session when both the London and New York financial markets operate, which, as mentioned earlier, occurs between 8:00 AM and 12:00 PM Eastern time (ET). This is because during this period both the European and the American markets were accessible to trading hence high levels of trading and high volatility and liquidity. This is also the time of the year when many of the key economic statistics, and shocks, that impact the U. S markets are released.

Why Understanding Trading Sessions Is Important

It’s therefore very crucial to know when these trading sessions occur so that whoever is interested in Forex can be in a position to trade. Why? Because it enables you to identify when the playground has the most visitors—or when the market is most saturated.

If you do not know the operation time of the market you may end up trading at a time when there is little or no activity and therefore lose out on good business. Even worse, you might find yourself trading during oversensitive times when others are ‘in the red’, and all because you were not ready.

Let’s break it down:

• Active Trading Sessions: More people trading generally means that prices go up and down further, and this brings in higher revenues – or losses. This is why some traders like to trade during these busy sessions since they will have magnitude of opportunities to trade.
• Quiet Trading Sessions: The result is that, when there are fewer people trading, the price of goods does not fluctuate much. This could be ideal if one does not want to take big risks and that comes hand in hand with little ability to make big profits.

Resources to Determine Trading Sessions

So, how do you figure out when these trading sessions are happening? Thankfully, you don’t need to stay up all night watching the clock. There are plenty of resources available to help you keep track of the different sessions:

1. Forex Market Hours Tools

These are unique indicators that would enable you to see when each trading session is opening or closing. They are sometimes accompanied by a world map to indicate the various time zones. Some real-time Forex spreadsheets are Myfxbook or Forex Market Hours and Market24hClock.

2. Trading Platforms

There is usually information regarding the different sessions incorporated into trading platforms such as MetaTrader 4 or 5 in the form of indicators or tools.

3. Forex Calendars

There are some websites and apps that offer Forex calendars apart from displaying when sessions are available, such a calendar may also point towards any important economic event which may enhance the volatility levels.

4. Time Zone Converters

As you know, trading sessions are tied to the time zones, so such a tool as a time zone converter will be useful to determine at what local time a session begins.

Benefits of Sticking with a Specific Trading Session

Choosing and sticking with a specific trading session has several benefits which includes:

1. Consistency

Day trading in the same session each day also enables you to understand the behavior of the market during that period. This is particularly significant since it can enhance your trading decisions at some other point in time.

2. Better Analysis

It’s more satisfying to focus on a session because you can gauge the market forces at play and thereby take better positions. There are also cycles that you will discern that could not be observed in the event you are trading aimlessly.

3. Risk Management

This is important because the degree of volatility in the price during the intention of your chosen session is higher and you need to be ready for it. With such a trading platform, you can exercise more precise control over stop losses and take profits, reducing the likelihood of being caught off guard by an unexpected stop out or loss.

4. Stress Reduction

It always carries some level of tension, and more so if one is always monitoring the market. One of the advantages of having a single session is that you spend less time trading making it easier to be calm most of the time.

5. Profit Opportunities

Choosing a session that fits your strategy and currency pairs to trade gives you the best chances of making money.