The best day of the week to trade foreign exchange. When is the best day of the week to trade foreign exchange? As you learn Forex, you must have ever wondered about this same question. In fact, timing is also crucial when you are trading foreign exchange. In this article, we will discuss about the best times throughout the week to trade Forex and also the best months for trading Forex. So, check this out!
The Best Day and Time of the Week to Trade Foreign Exchange
First of all, it is important to remember that the Forex market is available for five days in a week through Monday to Friday. When we go over this whole week, you might find a slow development of trading movement from late Sunday to Monday. Then, the uptrend starts its pace and summit on Tuesday. Moreover on Wednesday, trading volatility gets minor decrease.
The minor decrease here happens right before another improvement the next day. It is found that the day with highest volatility level is Thursday, strongly followed by Friday. Then, around 5 pm GMT on Friday, all the activity ends and the Forex market moves dormant for the weekend. After all, the answer of the best time of the week to trade Forex is on midweek.
#1 Sunday to Monday
How the time zones work play a role in everyday volatility too. When it is still Sunday night in Europe, it is already Monday morning in Australia. It means that U.S. and European sessions are not yet opening during this moment. At this point, the markets might have been active, but the volatility is considerably low because there is not much activity of economic.
Sunday night is considered as the only moment of trading week when gaps happen in regular basis for currency pairs. Thus, Sunday is not the most excellent day to trade in the market. Monday is not the best time of the week to trade either. Instead of place a trade, you can consider forecasting the future market trends and regulate them as the week begins.
#2 Midweek
When it comes to Tuesday, Forex trading goes faster and the market faces the first spike of trading activity. The market volatility on Tuesday is around 120-130 percent of what it happens on Monday. This is why this day is considered as one of the day of the week to trade foreign exchange. Then on Wednesday, there is a bit dip in market volatility.
On Wednesday, trading activity reduces to somewhere in the middle of what happens on Monday and Tuesday. This situation occurs due to a phenomenon called as swaps. Generally, a swap is interest paid by Forex traders that hold position among daily sessions during the night. When it comes to swaps, a lot intraday traders don’t get bothered by this condition since they never trade overnight.
#3 Friday
On Friday, there is something interesting occurs. On this day, the currency pairs which are well-known during the European and Asian sessions start to overlap. These currency pairs remain as volatile as they are on Thursday. Typically, we are discussing about the GBP/JPY and EUR/JPY pairs. Meanwhile, currency pairs of Asia Pacific and North America drop in volume because the market is going to close.
The Best Months to Trade Foreign Exchange
Before we close the discussion, it is a good idea to learn which month is the best to trade foreign exchange. Based on the volatility level, there are three periods: January to May, June to August, and September to November with the second period as the period when volatility slows down. Now, don’t forget to learn Forex further and trade during this best time.