Trading Sessions and Best Times to Trade

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Whilst the foreign exchange market never actually closes because currency is always being exchanged no matter what the day or time, for traders looking to make money from the Forex market, the trading market is open 5 days a week 24 hours a day with the unofficial close each day being at 5PM New York Close time.

Each country has its own trading sessions that fall in-line with their equity markets. New Zealand is the first in the world to open its market followed the Asian session, Europe and UK sessions and lastly the US session. Below is a graph that highlights the different Forex sessions and how the different markets trade. The graph also shows how the UK and US sessions overlap and trade at the same time as each other.

 

 

Whilst the market is open for 24 hours there are times within the 24 hours that tend to have higher trade volumes. The Asian session is known to be often very quiet, where as the UK and US sessions have a much higher trade volume. This is super important to traders because there are much better times to make trades than others and obviously traders want to be playing their trades when they have the highest chance of success.

Volatility is at its highest when the volume is at its highest. For traders to make money they need to have high levels of volatility. Volume and volatility are normally at their highest during the London and New York sessions. As mentioned above; for 4 hours both of  the UK and US overlap each trading session and are open for trading at the same time. This period is the usually when the amount of trades being processed is at its peak due to the biggest two regions both being opened for trading.

 

 

Best Time Frames to Trade

Charting platforms generally have many different time frame charts. When we say time frame we mean the time that goes into making an individual candle. These time frames range from 1 min through to 1 month. This means that on a 5 min candle, 5 minutes has gone into making that candle.

Traders that use technical analysis to trade will use these charts to analyse charts to trade. They will normally wait for a candle to close and then assess if it has made a trigger signal that fits their trade criteria.

When new traders come to Forex they invariably start on the smaller time frames such as the 5 min or 10 min candles. The main reason for this is the smaller the time frame, the quicker the candle closes and thus the more trading opportunities the trader can have.

The problem with this is that more trading does not mean more profits and in fact it normally works out the opposite. The smaller time frames are known for noise and confusion. Basically the smaller time frames the more wild and erratic they can be. and generally leads to the more over-trading which is a massive account killer.

 

 

The best time frames for traders to start their trading on are the higher time frames such as the 4hr and daily charts. The reason for this is the trigger signals produced on these time frames are more reliable. The higher the time frame the more reliable the signals you will find. This is simply because of the extra time that has gone into making the signal.

A candle that has formed on the 1 minute chart has had 1 minutes worth of data gone into making it. A daily candle has 24 hours worth of data gone into making the candle. The more time than has gone into making the candle the more information we can gather.

When learning to trade, starting with the daily chart trading strategies are not only much better because of better and more reliable signals, but they also give new traders the chance to take their time and make correct decisions. On the smaller time frame charts such as the 5min chart, trading decisions will be rushed which is never ideal when making or managing trades.

 

Extra Forex Lessons

The Best Pairs and Time Frames to Trade

Trade Forex and Keep Your Day Job

 

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Introduction to Forex – Course Outline

What is Forex?

How Forex is Traded

Trading Sessions and Best Times to Trade

Leverage, Margin, Pips and Lots

Brokers (spread, commissions & rollover)

Types of Forex Analysis

Price Action Trading – Johnathon Fox’s Trading Strategy Introduction

Making Forex Trading Plan

Common Forex Trading Traps to Avoid

The Correct New York Close MT4 5 Day Charts For Traders to Trade With

Johnathon Fox’s Professional Trading School

Trading Sessions and Best Times to Trade was last modified: June 30th, 2014 by Johnathon Fox