When it comes to forex trading, there are many factors that go into consideration to have a successful session. Not only does the trader’s knowledge of markets and strategies come into play, but it’s also vital to understand the best times during the day to make trades. Because a trader may be dealing with numerous types of world currency from various markets, there are often certain combinations of currencies that may fare better at certain times of the day. Therefore, when you are involved in forex trading discovering the very best time to trade can mean the difference between finishing the day with profits or with losses.
According to many forex trading experts, most traders fall into a category known as “Range Traders,” meaning their successes and failures in trading depend largely upon market conditions. When their habits have been more closely analyzed, the majority have been found to be trading at the wrong time of day. Based on the data compiled on these traders, most traders have had their greatest success between 2 p.m.-6 a.m. Eastern Standard Time. This has been based on more than 12 million trades conducted by forex traders worldwide, and has shown that it is during hours of low volatility that traders are able to have their greatest success.
During the period between 2 p.m.-6 a.m., researchers have noted traders achieve excellent results during the Asian trading session, and also do quite well due to the Euro having far less movement during this time as well. However, while this time period appears to be the most advantageous, many traders make the mistake of trading from 6 a.m.-2 p.m. Eastern Standard Time. In large part, this appears to be due to the mistaken belief that if trading is conducted during what are considered by most to be normal business hours, trading profits will be greater. Yet the opposite usually happens, causing traders to panic and make even more mistakes.
For those forex traders who do trade during the 2 p.m.-6 a.m. timeframe, certain pairs of currencies appear to work best. Pairings such as the U.S. Dollar and Euro, along with the U.S. Dollar and Swiss Franc, have over a 10-year period achieved far better results than many Asian currencies traded during the same hours. By taking advantage of this data when forex trading discovering the very best time to trade can become a much easier task.