When are the best times to trade Forex?
Being on time is an important part of profitable Forex trading.
In this article, I show with supporting data which have been the most profitable times to trade depending on whether you are:
A day trader or a long-term swing/position trader.
Using a trading strategy that is based on trend/momentum or price behavior. You can benefit from this article by adjusting the amount you trade at different times accordingly, so you are risking more on days of the week, hours of the day, etc. that have historically been more profitable to trade. This can increase your business advantage and lead to higher business profits.
The best time of the month to trade the forex market
Many traders believe that Forex markets tend to behave differently right at the beginning or end of a calendar month. The logic behind this belief is that large investment institutions often decide to switch their investments right now. If this belief is true, we should expect to see evidence that trend reversals and relatively higher volatility have been more likely in the month's changes. And if you were an African, here you will get more tips for best time to trade forex in south Africa.
Historical tests show that the volatility of the major currency pairs has not tended to be higher at the beginning or end of a calendar month than at other times of the month.
What about trend reversals? Is there any evidence that trends have been more likely to reverse on the turns of calendar months? We can test this by seeing if 50-day breakouts were less likely to be successful when they occurred at the start of a new month, compared to their success on all days, by measuring the next day's average price movement:
Breakout rate per day
In general, trend outbreaks at the beginning of a new calendar month appear to have been more likely to fail than outbreaks occurring at other times.
Trend traders should be aware that for them, the beginning or end of a calendar month has historically NOT been the best time of the month to enter a new trade, as the price is trending unusually high to reverse its trend. .
The range traders should be aware that for them, the beginning or end of a calendar month has been a good time of the month to enter a new operation, for the same reason.
The best day of the week to trade Forex
The day of the week can be an important factor in Forex trading, but its importance will vary depending on whether you are a day trader or a swing or long-term position trader.
Day traders don't leave trading open on the weekend when markets are closed, so you don't have to worry about the risks associated with doing that.
Long-term traders should be aware that there are significant risks in leaving trades open over the weekend, as stop losses can be exceeded if the market opens early the following week with a price gap beyond stop loss. This means that you can lose much more than you anticipated in the worst case. You cannot exit Forex trading on the weekend, although there are some rare instances of brokers offering weekend trading facilities to their clients.
Best day of the week for swing/position traders
I mentioned earlier that there is an advantage for long-term traders to enter new trades as early as possible in the week. There are additional factors to consider depending on whether your strategy is trend of trades or ranges of trades.
It is believed that the Forex market tends to start the week indecisively, changing direction on Monday and Tuesday before beginning to trend more decisively from Wednesday to Friday.