If you decide to join this largest, most massive as well as liquid trading market, then you should be ready to consider different aspects and learn every beneficial tip for better profits. This long list of necessary things begins with the most active time period for trading. Even though the market is open 24/5, there are still some periods where your chances increase significantly.
However, not all hours are equally suitable for trading. There are certain times of day when trading activity is at its highest and prices are more likely to move significantly. These are known as peak hours or prime time for Forex traders. Identifying these times of day can give you an advantage over other traders who may not be aware of them.
That is what will be explained in this article. More specifically, we will talk about trading forex for major currencies, and their beneficial sides and explain them within the context of best trading hours.
The best time to trade on the currency market is when the market is most active and therefore offers the best opportunities for traders to make profits. For those who are not clear about the meaning of the best time concept, here are some reasons. First, as mentioned earlier, this is when the market is most active and therefore offers more opportunities for profit. Also, the level of volatility rises which can be very profitable. Finally, by trading during these times you can take advantage of different time zones which can offer different benefits depending on your strategy.
On the other hand, there are a few key reasons why selecting the major currency pairs is more beneficial for Forex traders. First, the major currency pairs tend to be the most liquid, meaning there is typically more trading activity and larger bid-ask spreads. This can lead to better execution prices and tighter spreads. Second, the majors generally have lower volatility than other currency pairs, providing opportunities for longer-term trades. Finally, many of the world’s central banks intervene in foreign exchange markets most frequently with transactions involving the major currencies, so understanding their behaviour is essential for forecasting market trends.
The main benefits that traders can get if they trade on the Forex market with major pairs during the most active trading hours are:
- Liquidity: The foreign exchange market is extremely liquid. This means that there are always buyers and sellers in the market, so you can easily enter or exit a trade at your desired price level.
- 24-Hour Trading: Different from stocks or other types of markets, FX is available, anytime. Currencies can be traded around the clock 24 hours a day, 5 days a week. This makes it convenient for traders to choose their own trading schedule.
- Low Transaction Costs: Transaction costs in the Forex market are usually very low compared to other financial markets such as stocks and futures. This is due to the fact that there is no central clearing house or middleman involved in currency trades.
Best hours with different FX markets and currency pairs
The best trading hours for the African Forex market depend on a few factors. The primary reason for sure is the traders’ location. If you are in Africa, then the market will be open from 10:00 am to 6:00 pm. Also, if you are trading during daylight savings time, then the market will be open from 9:00 am to 5:00 pm. The third factor is what currency pair you are trading. Some pairs trade better during certain hours than others do. For example, EUR/USD tends to be most active between 2 am and 4 am Eastern Time (New York), 7 am to 11 am GMT, and noon to 2 pm Eastern Time (New York).
The best trading hours for the European Forex market are between 8:00 am and 4:00 pm GMT. This is when the majority of currency pairs are traded. It will be best if you start trading during this period with EUR-USD, GBP-USD, or another type of major pair.
It will not be surprising if we say that for the US Forex market, the best trading hours for major currency pairs are during the European and US sessions. This results in tight spreads and lower transaction costs. However, spreads tend to be higher during this time as banks and financial institutions quote their own prices rather than following the interbank rates closely. Nevertheless, major currency pairs such as EUR/USD, and GBP/USD traded actively during this time too.
And finally, the best trading hours for the Asian Forex market are between 8:00 pm and 4:00 am EST. This is because, during these hours, the majority of Asian countries are open for business, which allows for more liquidity in the market. The most active currency pairs during this time are typically those involving the Japanese Yen, as well as other major currencies such as the US Dollar, Euro, and British Pound.