What are the best days of the week to trade forex?
This article will discuss the best days of the week for trading Forex, as well as, the best trade times during the week, why market volatility is important, the best months to trade Forex, a section concerning why the summertime is a slump period for trading, how trading differs in other parts of the year, and much more!
Table of Contents
- Best Day and Best Time For Forex
- Sunday to Monday
- Best Months to Trade Forex
- Summertime Trading Slump
- Autumn Boom, Christmas Freeze and Spring Marathon
Best Day and Best Time For Forex
So, what are the best days of the week and best time to trade Forex?
Let's go over the whole trading week in depth. First of all, there is a slow development of activity from late Sunday to Monday. Then the uptrend picks up its pace and peaks on Tuesday. A minor decrease of trading volatility occurs on Wednesday, right before another increase the next day. The weekday that scores highest in terms of volatility is Thursday, closely followed by Friday. At around 17:00 GMT on Friday, all activity ends and the market goes dormant for the weekend.
Still wondering what are the best days to trade Forex? The answer is simple - it's midweek. Take a look at the table below to see the daily pip range for major currency pairs:
If you've got some trading experience under your belt, you may have already noticed that market volatility is not consistent. It doesn't just vary on an hourly basis, but also every week, or even month.
It is important to be aware of the level of volatility and how to use volatility protection settings. Knowing the optimal levels can make the difference between major profit and major losses. In the table above, the 'Sunday' column indicates low pip range, and the columns for 'Tuesday', Wednesday', and 'Friday' indicate high range.
Why choose the pip range as a volatility indicator? While pip range doesn't exactly measure volatility, it's an intuitive way to get a big picture of the market. Pip range shows how far markets can move, on average, on a particular day. What it doesn't show, is all the swings within that pip range.
This is just something you have to keep in mind, if you want to know the best days for Forex trading. When you're using trading software, you can easily track volatility. All of the data is available to you and you don't have to search for it - especially if you're using a powerful trading platform like MetaTrader 5.
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Sunday to Monday
The way time zones work also plays a role in daily volatility. When it's Monday morning in Australia, it's still Sunday night in Europe. European and U.S. sessions are not open during this time. The markets are already active, but volatility is relatively low. Since there isn't much economic activity on weekends, it's also unlikely that the market will adjust to new conditions. Sunday night is the only time of the trading week, when gaps occur regularly for currency pairs.
Therefore, Sunday is not the best day to trade the Forex market. This is why it's not recommended to start your trading week on Sunday. Judging by the lack of activity on the market, most traders follow this advice. Monday isn't the best day of the week to trade currency either. The first half of Monday is sluggish.
European traders wait for economic news and macro data: before they decide to open new orders. As the week begins, traders try to get a feel of future trends and adjust to them. This is why Monday is the least volatile weekday.
On Tuesday, trading quickens and the market experiences the first spike in activity. Market volatility on Tuesday is approximately 120-130% of what it is on Monday. This is why Tuesday is one of the best days to trade Forex. On Wednesday, there is a slight dip in volatility. Trading activity decreases to somewhere in between what it is on Monday and Tuesday. This happens because of a phenomenon known as swaps.
To put it simply, a swap is overnight interest paid by traders who hold their position between daily sessions. For instance, holding a position at the end of Wednesday's session means a triple swap has occurred. However, this is true only in the case that the position was open over the previous weekend. When trading small volumes, swaps don't seem like much of a burden.
Many intraday traders never even bother with swaps, because they never trade overnight. For traders who operate with big volume and long-term trades, a positive triple swap can generate profit. That's why Wednesday is generally a bit lower in volatility compared with Tuesday and Thursday. Due to its high volatility, Thursday is another excellent day to trade the Forex market.
Something interesting happens on Fridays. The currency pairs that are popular during the Asian and European sessions begin to overlap. They stay almost as volatile as they are on Thursday. Mostly, we are talking about the EUR/JPY and the GBP/JPY currency pairs. Meanwhile, pairs of North America and Asia Pacific currencies drop in volume. Obviously, this is because of the markets closing on Friday night. Generally, the first half of Friday sees a lot of trading action, and provides good conditions for trading.
Keep in mind that volumes drop significantly in the second half of the day as the weekend approaches.
Moreover, weekly trends can change direction as traders close their positions to avoid weekend risk. Additionally, the first Friday of each month sees the U.S. non-farm payroll (NFP) report published. This data release can cause major swings in all dollar-related pairs. All in all, Tuesday, Wednesday and Thursday are the best days for Forex trading due to higher volatility. During the middle of the week, the currency market sees the most trading action. As for the rest of the week, Mondays are static, and Fridays can be unpredictable.
Best Months to Trade Forex
Now that we have reviewed the intraweek market dynamics, let's see what happens throughout the year. What are the best months to trade Forex? The whole calendar year divides into three clear periods of volatility. Out of these three periods, two provide good conditions for trading.
The first good period includes these five months:
After those months, volatility slows down for the duration of summer:
The second good trading period occurs in autumn, and is the most volatile part of the year:
December is also a generally good month for trading, though there's a noticeable decrease in market activity near the end. The main reason for this fluctuation in volatility, is holidays. Any holiday period naturally leads to a decrease in trading volumes. After the holiday period ends, there's a pickup in market activity.
Summertime Trading Slump
Once again, it all boils down to the habits of the big market movers. There's a saying on the trading floors of London: "sell in May and go away". Not surprisingly, S&P research indicates that summer months show the least returns for most European financial markets. August is the worst month to trade, since many institutional traders in Europe and North America are on vacation. This leads to bigger and less predictable price swings. The big market movers have to protect their portfolios and returns, which leads to:
- Long-term traders closing their trades over the summer
- A return of trade action when the the autumn comes
If you still want to continue trading in the summer, you must prepare for periods of ups and downs. A range-based system is more appropriate for the summer. The same goes for trading in small intervals, to catch mini-trends. Sooner or later, the summer sideway trend breaks. It usually happens immediately after Labor Day in the U.S - celebrated on the first Monday in September.
The last four months are the most important for yearly returns: because even after you've experienced a poor summer season, it's possible to improve your profits during autumn and winter. If you've decided to skip the summer trading season, be smart about how you return to the market. Test the new conditions on a Demo account first, to get a better feel for future trends, and without exposing yourself to risk.
Autumn Boom, Christmas Freeze and Spring Marathon
The autumn boom reflects the majority of traders returning to the markets after their summer holidays. Business activity in other industries also picks up around this time. This makes autumn months the best time of the year to trade Forex. By the second half of December, trading activity slows down - much like in August.
The few weeks before and after Christmas are the slowest. It's not until mid-January that the markets start to pick up. The first period of the new year is always an open season for trading. Traders usually have a period of four-to-five consecutive months to make some cash, before the summer drought hits again.
It may not compare to the autumn season, but it does provide many excellent opportunities. Without a doubt, it's the second best period to trade the currency market. Here's one thing to keep in mind throughout the year when it comes to trading: if there is a globally celebrated holiday, trading volumes decrease and the markets can go through a few unexpected swings.
This is especially true for major holidays like Christmas and Easter. As a trader, you should always check up on these holidays and add them to your trading calendar. So, high market volatility brings more opportunities for currency trading. And to avoid frustration from a lack of market moves - don't trade during periods with low volatility.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
Worst Times to Trade:
Fridays – liquidity dies down during the latter part of the U.S. session. Holidays – everybody is taking a break. Major news events – you don't want to get whipsawed!
The upshot: Experienced traders often view Monday as the best day of the week to buy and sell stocks because of the time and pent-up demand since the last trading session the previous Friday.What time of the day is best to trade forex? ›
The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.Should you trade forex on Friday? ›
Forex traders avoid trading on Fridays because the market is generally more volatile on Fridays. This is due to the fact that many market participants are closing their positions at the end of the week. This can lead to large price movements, which can be difficult to predict.When should I not trade forex? ›
Sometimes staying on the sidelines is the best option. While the Forex market is a 24 hours a day, 5 days a week market, there are certain situations when you should stay on the sideline. These include bank holiday hours, high impact news, important central bank meetings and illiquid market hours.How do you win big in forex? ›
Forex Trading Conclusion
- Pay attention to pivot levels.
- Trade with an edge.
- Preserve your trading capital.
- Simplify your market analysis.
- Place stops at genuinely reasonable levels.
Sunday night is the only time of the trading week, when gaps occur regularly for currency pairs. Therefore, Sunday is not the best day to trade the Forex market. This is why it's not recommended to start your trading week on Sunday. Judging by the lack of activity on the market, most traders follow this advice.What is the best forex to trade at night? ›
The fact that major currency pairs such as EUR/USD and EUR/GBP tend to be less volatile overnight may make them the best forex pairs to trade at night for beginner FX traders. They tend to be less active and thus less volatile at night, particularly if they do not involve an Asian currency.Which month is best for Forex trading? ›
Autumn months are the best time of the year to trade Forex. By the second half of December, trading activity slows down - much like in August. The few weeks before and after Christmas are the slowest. It's not until mid-January that the markets start to pick up.Is Tuesday a good day to trade forex? ›
Tuesday is the most active day of the week. Trading patterns quicken, and the market experiences the first spike of the week. Market volatility on Tuesdays could reach 120%-130% of Monday's volatility. Therefore, Tuesdays are one of the best days for forex trading.
In the forex market, a trader can hold a position for as long as a few minutes to a few years. Depending on the goal, a trader can take a position based on the fundamental economic trends in one country versus another.Is it good to trade forex everyday? ›
Compared with any other financial market, the forex market has the largest notional value of daily trading. This provides the highest level of liquidity, which means even large orders of currency trades are easily filled efficiently without any large price deviations.Is it better to trade on Monday or Friday? ›
Monday would probably be the best day of the week to buy stock, according to a market theory called the “Monday or weekend effect.” The Monday effect says that the market will continue gaining on Monday if the market was up on Friday.Why do I keep losing in forex? ›
Overtrading - either trading too big or too often – is the most common reason why Forex traders fail. Overtrading might be caused by unrealistically high profit goals, market addiction, or insufficient capitalisation.Is it good to trade forex on Mondays? ›
Things certainly pick up during Monday afternoons, but the forex market doesn't reach peak liquidity until Tuesday at the earliest. The forex market is most noticeably active during the middle the week, specifically Tuesday mornings through to Thursday.What is the secret in Forex trading? ›
One of the main Forex secrets is that the majority of these systems don't actually work. They have been developed by marketers, and are designed to sell, and not work. Once you have paid for the signals or automated software, you will not be able to get your money back ,and such tools would hardly bring you any profit.How do you avoid losing forex? ›
- Homework First. ...
- Make a Plan and Find a Good Broker. ...
- Simulated Trades. ...
- Maintain Clean Charts. ...
- Money Management. ...
- Begin Small. ...
- Leverage Use. ...
- Record-Keeping - A Must!
The reason many forex traders fail is that they are undercapitalized in relation to the size of the trades they make. It is either greed or the prospect of controlling vast amounts of money with only a small amount of capital that coerces forex traders to take on such huge and fragile financial risk.
The way to make money fast in forex, is to understand the power of compound growth. For example, if you target 50% a year in your trading, you can grow an initial $20,000 account, to over a million dollars, in under 10 years. Break the norm, and gain more.Can you get rich quick with forex? ›
Forex trading may make you rich if you are a hedge fund with deep pockets or an unusually skilled currency trader. But for the average retail trader, rather than being an easy road to riches, forex trading can be a rocky highway to enormous losses and potential penury.
Implementing a Forex Trading Strategy
There is no such thing as only profitable trades, just as no system is a 100% sure thing. Even a profitable system, say with a 65% profit-to-loss ratio, still, has 35% losing trades. Therefore, the art of profitability is in the management and execution of the trade.
0700 to 2000 GMT are acceptable hours for day trading the EUR/USD because there is an adequate movement to extract a profit and cover spread and commission costs. You ideally want to day trade the EUR/USD between 1300 and 1600 GMT to maximize efficiency.How to start day trading with $100 dollars? ›
Minimum Deposit: Your broker of choice should have a minimum deposit requirement of $100 or less. Otherwise, you can't deposit just $100. This is why you need to trade on margin with leverage. For example, if you are in the United States, you can trade with a maximum leverage of 50:1.What is the easiest to trade in forex? ›
Breakout trading is one of the simplest forex trading styles, making it a good choice for beginners. Before we look at how it works, let's define the term “breakout”. Put simply, a “breakout” is any price movement outside a defined support or resistance area.What time do forex traders wake up? ›
Typically, the US forex market is most active just after the open of the New York session at 8am (EST). At this time, liquidity and volatility will likely be high as traders begin opening and closing their positions according to the market news for that morning.Which currency pair is most profitable in forex? ›
- EUR/USD: The Euro and US dollar. ...
- USD/JPY: The US dollar and Japanese Yen. ...
- GBP/USD: The British pound sterling and US dollar. ...
- USD/CHF: The US dollar and Swiss Franc. ...
- AUD/CAD: The Australian dollar and Canadian dollar. ...
- NZD/USD: The New Zealand dollar and US dollar.
Best forex timeframes for day traders
Day traders tend to take a short-term approach, with most choosing timeframes lasting from 15 minutes to four hours.
The biggest risk of trading on Saturdays and Sundays is that there is often less liquidity. This means that it can be more difficult to get your trade executed at the price that you want.Can I trade forex forever? ›
As a general rule, there is no limit to how long you can keep a trade open. Some brokers might put limits, but any reputable Forex brokers won't. As long as there is a market, theoretically, you could keep your trade open forever.
Forex trades 24-hours a day, from Sunday evening to Friday afternoon in U.S. time zones. This around-the-clock action makes it impossible to watch continuously in real time, encouraging a razor-like focus on specific time frames and forex pairs.What time frame is most profitable forex? ›
Best forex timeframes for scalpers
Scalpers usually work within very small timeframes of one minute to 15 minutes. However, the one- or two-minute timeframes tend to be favoured among scalpers.
Leverage in Forex Trading
In the foreign exchange markets, leverage is commonly as high as 100:1. This means that for every $1,000 in your account, you can trade up to $100,000 in value. Many traders believe the reason that forex market makers offer such high leverage is that leverage is a function of risk.
The answer is yes. In the year 1992, a person named 'George Soros' made one billion dollars by trading in currencies.What to avoid in Forex trading? ›
- Not Doing Your Homework. Currency pairs are closely linked to national economies and are affected by many factors. ...
- Risking More than You Can Afford. One common mistake new traders make is misunderstanding how leverage works. ...
- Trading without a Net. ...
- Overreacting. ...
- Trading from Scratch.
While Fridays may in theory be a good day to sell shares, traders and investors ignore the larger context of the market and fundamental analysis at their own peril. Generally, the more liquid and volatile a market is, the more opportunity for potential profit exists (this also means risks of loss are higher too.)Is Friday good for trading? ›
The Most Lucrative Day. Many forums will tell you that Monday is the best day to buy stocks, while Friday is the best day to sell stocks. The logic behind this advice is that stock prices are said to be at the lowest on a Monday (meaning you will buy shares at a lower price).Is Friday good to trade? ›
Trading on Fridays provides an opportunity for high reward but that also comes with a high risk. There are some reasons why you shouldn't trade on Friday: 1) Large gaps when the market opens 2) Higher spreads 3) Bad market conditions.How long does it take to become a successful forex trader? ›
In general, it takes around 6-12 months to start making consistent profits from Forex trading. However, this is only if the trader is putting in the time and effort to learn and practice their trading strategy.Why do 90 of traders fail? ›
Some common mistakes that are committed by the intraday traders are averaging your positions, not doing research, overtrading, following too much on recommendations. These mistakes have caused many day traders to take losses. Around 90% of intraday traders lose money in intraday trading.
A well-known figure in the Forex world is that 90% of Forex retail traders do not succeed. Some publications quote failure rates as high as 95%.Why do traders not trade on Mondays? ›
Well, there are several observations we can make: Mondays have the lowest volume so momentum is weaker. During the following business days, the number of trading contract increases. Fridays have the highest volume so momentum is stronger.What are the best and worst days to trade forex? ›
Tuesday, Wednesday, and Thursday are the best rates to trade Forex because they are the days that see the most action. You want to make your Forex trades at the busiest times. This is going to mean the best return on your investment as well as the most profitable trades.Why you shouldn't trade on Fridays? ›
Trading on Fridays provides an opportunity for high reward but that also comes with a high risk. There are some reasons why you shouldn't trade on Friday: 1) Large gaps when the market opens 2) Higher spreads 3) Bad market conditions.What time are forex spreads lowest? ›
Worldwide Forex Markets Hours
That reduces market spreads and increases volatility, including in the following windows: 8 a.m. to noon, with both the New York and London markets open. 7 p.m. to 2 a.m., with both the Tokyo and Sydney markets open. 3 a.m. to 4 a.m., with both the Tokyo and London markets open.
All in all, Tuesday, Wednesday and Thursday are the best days for Forex trading due to higher volatility. During the middle of the week, the currency market sees the most trading action. As for the rest of the week, Mondays are static, and Fridays can be unpredictable.What is the easiest to trade on forex? ›
A range trading strategy is quite popular among beginners, as it's one of the less elaborate plans. When a market consistently moves between two price levels, it's considered to be in a 'range'. Within that range, you could then identify certain upward or downward trends.Should you hold forex overnight? ›
Forex traders will generally take the risk, cost of capital, leverage changes, and strategy into account when deciding to maintain an overnight position. The goal of keeping an overnight position is to try to increase profit on the trade by holding it overnight or by minimizing the loss of a losing daytime trade.What time should I wake up to trade forex? ›
Typically, the US forex market is most active just after the open of the New York session at 8am (EST). At this time, liquidity and volatility will likely be high as traders begin opening and closing their positions according to the market news for that morning.