What’s the Best Time of Day to Trade Forex?

08/04/2009 12:01 am EST

Focus: FOREX

Is one time of day better than another for effectiveness in trading the forex markets? Well, like most things, it depends who you ask—and that's what I did. I asked three stellar forex analysts here what time of the day they prefer to do their analysis and trade in the spot and forex futures markets. Here's what they said, and please feel free to share your own comments below.

From Wade Hansen:

"The best time to trade the forex market is during London trading hours. Most of the volume in the forex market flows through London, and the major currency pairs tend to establish strong short-term trends during the London market hours. You also have the benefit of catching the open of the New York trading day and any movements that may come from US economic announcements released at 8:30 am ET."

From John Jagerson:

“I would suggest that for longer-term positions, the North American afternoon is best for exactly the opposite reason that short-term traders prefer London hours. The market is relatively quiet in the US afternoon as both London and NY are closed, Japan has not come online yet, and it is only New Zealand and Australia that are open. It gives you time to think without the market moving a ton. You aren't at any disadvantage with the spread and you have had time to see how the market is reacting to the day's economic events.

If you are in Europe, I don't think there is anything wrong with entering long-term trades during the London or New York sessions when things are really active, but if you are a long-term trader in North America, I think using the afternoon lull is convenient (no early mornings) and the low volatility makes analysis a little easier.”

From Blake Young:

“That is similar to asking when is the best time to exercise. Some people like to exercise in the morning and watch the sun rise, others like to go to the gym during the best meat market times and flex in the mirror. It comes down to preference and what you are trying to accomplish.

My preferred trading times are between 8am - 11am ET for scalping/intraday trading and around 5pm-8pm ET. The earlier times gives me the best volatility for the scalping and the later times gives me the quietest market to plan the longer-term, multiple-day trades (the price action from news is already shaken out).”

My Thoughts:

I'm a long-term trader, so I prefer to do my analysis and place trades after 2 pm ET. I find there's little volatility and it prevents me from being reactionary when my trades are executed.

So what are your thoughts?

By Ryan Teeples of LearningMarkets.com

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