Good Time when to trade forex is when the market is most active. The forex market is open 24hrs a day and 5 days a week world wide.
The good news is you can trade forex anytime of the day or night. You can also trade from wherever you are as long as you can access internet.
Although the market operates 24hrs in a day, it doesn’t mean you should actually trade every single hour of it.
Set ups will always be there in the market but most of them will not workout.
Trading every hour of the session may also not be good for your health.
Over trading can lead to fatigue and exhaustion of your body and at the same time exposes your account to too much risk.
Deciding on when to trade also depends of what kind of a trader you are. If you are a daily trader, it really makes a lot of sense to know when to trade. But for a long term trader ie, position trader it may not relevant since you hold trades for week or even months.
If you are a daily trader, that is, scalper, swing traders, day trader, the time to trade would be when the market is most active.
This is when more than one of the 4 market sessions are open simultaneously.
During this time of overlap, volatility is high because most traders are on the market and spreads tend to narrow . It is also when most of the big news is released.
Trade forex during the periods of overlap market sessions, you incur less spread, market volume is high hence high volatility. price makes high movement adjustments making it easy to make profits.
When to trade forex – buy & sell a currency pair
Now that you know when to trade forex, let’s just see when to buy or sell a currency pair.
First you must have a strategy you follow to trade in the market.
Your strategy contains your dos and don’ts and a kind of set up you look at every time you get to the market.
My question is? What does your set up look like? Do you always follow or trade the exact same set up every time you take a trade? And do you follow your strategy rules?
If you can give the best answer to these questions, then you are good to go.
Knowing when to buy or sell (trade) helps you to trade conveniently without any worries. Such as, missing out opportunities in the market. Or taking trades late and failing to trade because your trading time collides with other activities.
It also saves you from chasing the market which may lead to making wrong decisions.
So when do you really buy or sell?
You only buy or sell when that exact set up on your strategy shows up on the market chart.
Your setup tells you when, what and where to buy or sell.
According to the forex trading principles, you buy when currency price of the base currency appreciates in value. In simple terms when price is moving up on the chart.
In addition to that, you sell currency pair when price value of the base currency falls in value. Or when the price is moving down on the market chart. Don’t forget you only buy or sell following your trading setup.
When trading foreign currencies, you buy when the market is moving up and sell when it is moving down.
Despite that,you have to first choose the currencies you want to trade, study them and analyze their trend movements, volume, liquidity and their volatility.
After gauging their strength, you can choose when to trade forex depending on which currency is gaining or loosing its value.
How to buy or sell on the Forex market chart.
If for example you choose to trade AUD/CAD, and you realise that the Australian economy is becoming stronger. AUD will appreciate in value which makes it stronger than the Canadian dollar.
This is how you know when to trade forex pairs as below;
In this case, the market will move upwards in favor of the AUD, so it will be a good time for you to buy AUD while selling the CAD. Just choose currency pair AUD/CAD and click on buy.
If the CAD is stronger than AUD, then the opposite is true. Sell AUD while buying the CAD. Choose the currency pair AUD/CAD and click on sell.
We buy at a low price expecting price to rise and sell at a high price expecting price to fall to earn a profit.
So when you BUY and price falls below your entry market price, it’s a loss. The same way, when price rises above your entry market price after a sell, it’s a loss to.
This is further illustrated in the figure below.
You at least now have a big picture of when to trade forex pairs.
We buy when the market price trend is moving upwards and sell when the market price is falling.
However, when price moves down below your entry level for a buy, it is a loss. the same happens when you sell and then price moves up above your entry level.
As we cover our next sessions we shall teach you on how to avoid making big losses and how to determine take profit level. Don’t go off there is more to learn
When is the forex market most active.
Unlike other markets, forex market is open for trading 24 hours a day, five and one-half days per week. It’s very convenient compared to other markets.
It’s always open day and night and you can trade forex anywhere at your place of convenience.
It’s of great importance to know the most active trading periods.
The busiest time when markets have highest market volumes of trades which is during the market overlap sessions.
Next lesson, we shall discuss more about Active trading hours and trading session.
Know which time will be most volatile, liquid and decide when to trade forex profitably.
The most active sessions in the forex market are; the London session, Tokyo, New York and Sydney.
The best trading hours are times when volume and volatility levels are at highest peak.
This means, more traders in the market. Most popular currency pairs are bought and sold. And currency price is moving fast and trending quickly. This how you know when to trade forex.
The large volume and strong volatility cause large pip movements during the best trading hours. Spreads become narrower hence lower transaction costs.
So this enables you to catch a good trading opportunity and make profits.
This normally happens when market trading sessions overlap
The forex market GLOBE – when to trade forex
The markets open on Monday 7:00 Sydney time( 10:00 PM GMT) and closes on Friday 17:00 New York time (10:00 PM GMT).
Forex market is most active in sessions of overlap so that’s when to trade forex.
US/Europe overlap between 8AM-12PM (new York time), Europe/ Asia; 3am-4am and Tokyo/Sydney; 7:00pm -2am.
Tokyo is the first session to open and traders use its trade momentum to develop their strategies, and to speculate the future market changes.
How long you can hold an open position in forex, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer,...
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