What are the best and worst days to trade forex?
Forex trading is a 24-hour, five day a week marketplace, meaning that people can trade currencies at any time. However, just because the market is open doesn’t mean that it’s always the best time to trade. Knowing the best and worst days to trade forex can make a big difference in your profitability in the long run. In this article, we will explore the best and worst days to trade forex.
Best days to trade forex
1. Tuesday to Thursday
The best days to trade forex are generally Tuesday to Thursday. These are the days when the market is most active, and there are more trades happening, which means that there is more opportunity to make money. According to data from the National Futures Association, Tuesday, Wednesday, and Thursday are the busiest trading days of the week.
2. Overlapping trading sessions
The Forex market is open 24 hours a day, but different trading sessions overlap with each other, providing an excellent opportunity to trade. The best time to trade is during overlapping trading sessions since there are more traders active in the market, and the price movements are more volatile.
For instance, the New York session overlaps with the London session for four hours, and both sessions are active from 8:00 AM to 12:00 PM EST. This overlap provides high liquidity and volatility, making it a great time to trade.
3. Economic calendar events
The economic calendar events play a significant role in dictating the movement of currency pairs. The best time to trade is when the economic indicators are released since this is when there is increased volatility and liquidity in the market. The economic indicators that you should watch out for include:
• Unemployment rate
• GDP
• Interest rates decisions
• Non-farm payroll
• Consumer price index
Worst days to trade forex
1. Monday trading
Mondays are the worst days to trade forex. Many traders tend to avoid trading on Mondays since it is the start of the week, and the market is catching up with the events that may have happened over the weekend. As a result, the market is usually slow, and there is less liquidity and volatility.
2. Friday trading
Fridays are not the best day for trading forex. This is because many traders tend to trade less on Fridays since they are winding up their week’s trading activity. As a result, the market is relatively calm, and there is minimal volatility and liquidity.
3. End of month trading
End of the month can also be a difficult time to trade forex. This is because many institutional traders, such as banks and hedge funds, tend to close their positions to balance their books. This can cause a lot of volatility in the market, making it difficult to predict the direction of the currency pairs.
Frequently Asked Questions
What are the busiest trading hours in Forex?
The busiest trading hours in Forex are during the overlapping trading sessions between different time zones. These sessions are when the European and US markets overlap and the Asian and European markets overlap.
Why is Monday a bad day to trade forex?
Monday is usually a slow trading day, and the market has less liquidity and volatility. This is because traders are trying to catch up with the events that may have happened over the weekend.
What are the best pairs to trade on Tuesday to Thursday?
The best currency pairs to trade during the busiest trading days are the most liquid ones. These include the major pairs such as EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
Can I make money trading forex on Fridays?
Yes, it is possible to make money trading forex on Fridays, but the market is usually slow, and there is less liquidity and volatility. Therefore, traders need to be cautious and use appropriate risk management techniques.