What is the Best Day to Trade the Forex Market
The Forex market is open 24 hours a day, 5 days a week. This, however does not imply that volatility remains constant at all times. There are certain days of the week which currency prices move above others. If you seek to increase your profits and reduce your losses, it is crucial to know the market dynamics and employ the proper strategies for each case.
What is the best day of the week to trade the Forex market?
Let’s have a look at the entire (trading) week in detail:
Let’s begin with Sunday. From the table below, you can see that the lowest market movement forex is expected on Sunday. The average volatility increases daily until its peak is reached on Wednesday and Thursday. Also, Friday tends to have somewhat high volatility until around 17:00 GMT, and then it generally drops quickly, when the participants close for the weekend.
From the table, you will know which days are the best to trade in the Forex market. Here you will detect the range of pips for the most important currency pairs according to each of the week. Have in mind that the higher the range, the greater the volatility. It should be noticed that the range of pips, although being an excellent way to evaluate the best days to trade the Forex market, is not the measure of volatility solely. The range only pinpoints that prices can move in specific quantities on specific days of the week. Nonetheless, the rage of pips is an excellent sign of the expected volatility.
Which is the Best Forex Trading Day?
Sunday to Monday
The time of the day plays a crucial role. There are certain times in which ample higher volatility can be expected that other period of the day. When it’s Monday morning in Australia, it’s still midnight in Europe. That is, no trade in Europe and America. However, the market is already open, but volatility tends to be low. Sunday night is the only day of the week where a breach can occur under usual conditions. Until Monday morning (in Europe), trade is likely to be slow. From then on, Europeans traders commence their operations on the capital markets.
Tuesday, Wednesday, and Thursday
On Tuesday, the volatility rises fast, and the market experiences its first peak of activity. Market volatility on Tuesday is around 120-130% of what it is on Monday. That’s why Tuesday is one of the best days to trade Forex.
On Wednesday there is a low increase in volatility. Trading activity declines and remains somewhere in between the volumes of Monday and Tuesday. SWAP is the reason for this. SWAP is the overnight holding cost for financing the limit to be paid by the trader if he holds a position from one day to the next.
Also, there is the triple SWAP, which is calculated as a backup for the weekend in between the week. For instance, when you hold a position at the end of the Wednesday, you pay triple SWAP. Nonetheless, if a position is held over the weekend, you pay the usual, simple SWAP. If you trade rather small positions, that amount will not be vital, but you will have to pay the cost every night as long as you maintain a position consistently open. For intraday traders, notwithstanding, this doesn’t matter as their positions are closed the same day. For longer-term investment traders, the SWAP can affect profit.
That’s why Wednesday is usually lower in volatility than Tuesday and Thursday. Due to its high volatility, Thursday is another great day to trade the Forex markets.
Friday
The currency pairs, which are well-known during the European and Asian session begin to overlap. So they remain as volatile as on Thursday. Generally affected are the currency pairs GBP/JPY and EUR/JPY. Meanwhile, the currency pairs from Asia- Pacific and North America region appear to be decreasing in volume. This is undoubted because the markets are closed on Friday evening.
In general, it can be established that Friday presents good trading opportunities until late in the afternoon. Only then does the trading volume decrease as the early traders go into the weekend. Also, the “US Non-Farm Payrolls” is published every first Friday of the month. This data can spawn very high volatility and should be given your attention.
So it can be said that the best trading opportunities are gotten in midweek, which is Tuesday, Wednesday, and Thursday. This is also the case on Friday until the evening.