What is the Best Time to Trade Forex

In every market there are times during the day when you can place potentially winning trades with higher returns and the same holds good for the forex binary options market. Professional traders have always grabbed the opportunity to carefully time their trades. Choosing the best time to trade forex depends a lot on two factors, volume and volatility. This is known as the ‘Power Hours’ when there is a high trading volume in currency pairs where prices move fast and trend quickly.

Make the most of the European and US sessions

The Best Time to Trade ForexHigh volume and strong volatility are what you ought to pay attention to for every major currency pair during ‘Power Hours’. These peak levels cause large pip (point in percentage) movements usually from 8am to 12pm EST. This is the closing session of European markets and opening of the US session. Trading is most active where you can fetch good returns even on the slightest change in pip. For most experienced traders, this is the best time to trade forex especially in major currency pairs such as the   EUR/USD, USD/CAD, and GBP/JPY. When you are unable to trade at these times and are still in search of some good price action then the US and European markets, which are the largest trading centers can show significantly stronger volume and volatility during other times of the day.

Trading during the US session

The US session experiences plenty of volume and volatility in the USD/CHF and GBP/JPY currency pairs. Several foreign investors that require to convert currency into dollar assets also trigger plenty of action during the time when the US stock and bond markets open. This is the time when you will find greater price movements in the GBP/CHF since traders are required to transact in US dollars. The US session opens at 8am and closes at 5pm EST.

The European session

This session links to the US and Asian sessions, with London the hub of all forex trading. The GBP/CHF and GBP/JPY experience strong price movements as traders convert their European to dollar assets. This session runs from 2am to 12pm EST but is worth staying up for to gain maximum profit potential.

 The Asian connection

The Best Time to Trade ForexMany forex traders consider Asian hours the best time to trade in European currency pairs such as the EUR/USD. 2 PM to 6 AM Eastern Time (New York) is considered ideal for trade in the most popular currency pairs during the low volatility hours of the Asian session especially for those who implement ‘range trading’ strategies. This strategy involves the purchase of oversold currencies nearer to the support threshold and the sale of overbought currencies near the resistance threshold. This strategy is most effective in low volatility sessions.

Times to avoid forex trading

The overlap time of the European-Asian session is among the least active trading times where volume is thin and for the most part, trends are most unpredictable. The period between 2am to 4am EST is among the least active session. In addition, it is important to understand that not all currencies act the same. You will find the Japanese Yen more volatile during Asian sessions than the Euro. Very often 24 hour trading can result in far great losses than other time frames.

Every session that opens and closes can have affect trading in other sessions that follow across the globe. While it is wise to consider the best time to trade forex it is equally important to manage your time wisely. The forex market is a 24 hour one but that doesn’t indicate high action all the time. You also need time to rest, reflect on your trading, and the profits or losses you made. Knowing the optimal times to trade could potentially save you plenty of dollars.

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