Did you know that professionals prefer certain weekdays to trade currency pairs? Let’s dive deep and find out when to trade forex and the reasoning behind.
The Forex market is the most liquid market in the world. Most traders understand the importance of liquidity as it decreases spreads and increases trading opportunities. Beginner traders learn early on that the most liquid and the best trading hours are during London and New York trading sessions. However, not many of them know that there are differences between trading weekdays as well.
Liquidity can also be influenced by certain economic and political events. However, such events are also highly volatile and technical traders usually avoid placing orders prior to significant economic announcements. On the other hand, fundamental traders depend on analyzing economic and political news. Economic calendar gives traders exact announcement dates, therefore, knowing which days are the best to trade and which are best to be avoided is highly important for successful trading.
Best Days For Forex Trading
As we’ve already mentioned, liquidity is the most important in trading as there are more buyers and sellers on the market, which results in the best possible prices (the lowest spreads) on securities. In addition, liquidity brings increased activity and more trading possibilities.
Traders and analysts use historic data to find out the most liquid trading periods. Trading currency pairs is available from Monday to Friday, 24 hours a day. Exchanging currencies is still available for Banks and large institutions on weekends but the market is closed for retail traders during this period.
Trading resumes with the Australian Forex market open. Pacific trading hours include Sydney and Wellington trading sessions and generally these sessions are very low in liquidity. Spreads are the highest and there are less trading opportunities for traders.
Choosing active days for trading is highly important for intraday traders as they have a limited window of opportunity to make trades. On the other hand, Swing traders care less about what is the best day of the week to trade forex. Swing traders are usually paying much attention to economic announcements and place orders that take longer than 24 hours to finalize.
Markets are closed on Saturdays and Sundays for trading currency pairs and most trading instruments. However, some brokers enable traders to trade crypto currencies. Let’s take a closer look at each weekday and find out the best day for currency trading.
In addition to choosing the best time to trade forex, you should also choose the best and the most liquid assets as well. It’s no secret that Major currency pairs are more liquid than Minor pairs and Minors are more liquid than Exotics.
Start of the week: Monday
Mondays are usually low in liquidity as markets open with Australian sessions that have very low activity. For traders from the USA, the markets open on Sundays at 5 pm EST. Usually novice traders are trading on Mondays and Fridays. Whereas professional traders avoid placing orders unless the trading setup is great.
Mondays are usually great for analyzing the markets. Political and economic events that might have happened from Friday to Sunday will manifest on Mondays. However, Mondays are not great trading days. Professional short term traders use Mondays to spot general trends and plan Midweek trades.
Midweek: Tuesday, Wednesday, and Thursday
Midweek is when the action starts to manifest. Both professional and novice traders are actively trading on Tuesdays, Wednesdays and Thursdays that creates high liquidity and tight spreads. Usually trends are created and reversals take place during midweek.
Midweek has a great volatility, especially on Tuesdays when according to some estimates, volatility reaches 130% compared to Mondays. Increased volatility increases trading opportunities for intraday traders. What’s more, retail and institutional traders that are investing a lot of money, prefer weekdays to make sure that their limit orders will get filled without any trouble.
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Tuesday, Wednesday, and Thursday are the best days for forex trading. Chart and candlestick patterns work because traders trade them. High liquidity means that there are many traders that will be placing orders in favor of certain patterns or avoid trading against them. Novice traders are usually not good at technical analysis, that is why trading during Mondays and Fridays can be unpredictable. Patterns and technical analysis have a better chance of working when professionals trade.
End of the week: Friday
When we approach the end of the week the market gets ready to close for the weekends. During this time, we see high activity on currency pairs traded in European and Asian markets. However, the markets are more unpredictable than usual. Some swing traders that have opened positions during midweek, will close trades before weekends start. This way traders can avoid unpredictability and swaps. Swap fees are charged for keeping positions open overnight.
Closing trading orders makes markets less predictable as the process influences the price. For instance, let’s say you have purchased EUR/USD on Tuesday. By pressing the buy button, you helped the price on the currency pair to increase. Demand on a given product increases the price. Purchasing an asset when there’s a great trading setup, helps the setup to complete as you are placing the order in favor of the setup. And when you decide to close that position, the platform sells the asset to get out of the position. Selling influences the price but this time it makes the market unpredictable. Usually beginner traders are placing orders during Fridays, which adds to the unpredictability.
Best Forex trading days in order
- Tuesday
- Wednesday
- Thursday
- Friday
- Monday
- Sunday (For traders from the USA, the markets open on Sundays at 5 pm EST.)
Best trading months
We now know what the average trading week in the Forex market looks like, but only taking this into consideration might not be enough. Your trading experience might be different depending on which season of the year you are trading. It is recommended that traders take into account the time of the year they are trading.
Generally, summer months are less liquid than other seasons. And no wonder, many people take vacations during that period. Vacations cause markets to slow down, as there are fewer active traders on the market. Those that still trade during the summer months are trying to look for short trends and make their profits through a few here-and-there movements that occur on the market.
Once summer ends and autumn rolls around, increased trading activity arrives. This is considered the best time to trade Forex. The huge activity continues all throughout the Autumn, up until mid-December. Once Christmas approaches, the market slows down once again, but here it only lasts a few weeks, and in early to mid-January everything resumes. However, winters are more active than Summers.
Keep in mind that market trading hours change based on changing seasons. There’s a 1-hour difference between Winter and Summer times.
The main takeaways
FAQs on the best day for Forex trading
Is Friday good for Forex trading?
Fridays are generally unpredictable as many swing traders close active positions that were opened during mid-week. Usually novice traders trade during Fridays that further increases unpredictability and it’s not recommended to trade during Fridays unless the setup is great.
Is it good to trade on Monday?
If we look at the data, it says that trading on Monday is not the best decision. This is when the market just recently opened and there are a big number of traders who are yet to join the market. Mondays are the least liquid and have low volatility. You should avoid trading on Mondays unless your trading strategy or trading setups tells you to participate.
When should you not trade Forex?
Mondays and Fridays are considered to be the worst forex trading days. Mondays have very little activity and high spreads. Fridays have unpredictability. On the other hand: Tuesdays, Wednesdays and Thursdays are the best days of the week for trading forex.
