Not only is the forex market one of the largest and most lucrative entities of its type anywhere in the world, but it’s also the most uniquely structured. More specifically, the market is open 24-hours a day and five days a week, with each day broken up into three primary trading sessions that cover the length and breadth of the globe.
These sessions revolve around the world’s main exchanges, including London, New York and Tokyo. Between them, these sessions cover nearly 24 hours of trading, with the Singapore exchange filling in the small gap between the closure of the New York exchange (5pm) and the time that Tokyo opens for business (7pm).
It’s important to understand these sessions and the markets core hours, as timing remains central to successful forex trading. But why is this the case, and when is the optimal time to execute your orders?
Why is Timing Central to Successful Forex Trading?
In truth, there are two primary reasons why timing is so important in the forex market. Firstly, this entity is renowned as one of the most volatile in the world, with currency values prone to wild fluctuation in relation to a range of factors including economic data releases and real-time geopolitical events.
These events (which are sometimes unexpected either in terms of their timing or precise nature) can have an instant and direct impact on currency values, causing either significant declines or sustained appreciation that compromises your existing positions.
So, in addition to factoring in your appetite for risk and underlying strategy before executing a particular trade, you’ll also need to analysis the key market conditions and ensure that you time your order effectively.
Secondly, it’s important to time your order in accordance with the market’s schedule and relevant trading session.
The reason for this is simple; as the time at which you place you trade will have a direct impact on your chances of success, whilst it will also influence the profitability of each individual order.
When is the Optimal Time to Trade?
This raises an obvious question, with traders always keen to identify the optimal time to execute a trade in the global marketplace.
Whilst there’s no definitive or one-size-fits-all answer to this query, there are a couple of considerations to keep in mind when planning out your activity.
Most crucially, you’ll need to operate when the market’s levels of activity are at their highest, as this creates a scenario where trading spreads (the difference between the bid and ask prices) tend to narrow and become increasingly competitive.
To achieve this, we’d recommend targeting periods where active trading sessions overlap. For example, the London and New York stock exchanges cross between the hours of 8am and 12pm, whilst the London and Tokyo exchanges are both open between 3am and 4am each day.
This is why it’s imperative that you partner with a reputable broker like ATFX, whether you utilise spread betting or a similar investment vehicle to access the marketplace.
After all, online and affiliate mobile trading apps offer you instant access to the real-time market, no matter where you are in the world or your existing working schedule. As a result, you can optimise your chances of success and time your orders to coincide with the highest possible trading volumes.