EUR USD best trading hours
The best trading hours for momentum strategy (and trend strategy) for EURUSD forex pair is period from EUR USD opening hours till GMT noon (London open till noon) and the period when USA stock exchange overlap EUR stock exchange (14.30 GMT – 17.00 GMT)
Below is typical EURUSD daily volatility:
Assia session: This is low volatility period. Good for scalping forex strategy.
EU session open – EUR USD opening hours: EU session starts at 7.00 and 8.00 GMT time (London and Germany stocks exchange starts then). Volatility dramatically increases in that period. One hour after the EUR USD opening hours trend is formed and volatility increased. Till noon volatility and trend should be in the same direction (this is the most common scenario but not the rule).
EU session consolidation: this is the period from noon till the USA market opens in GMT. In this period are the most common breakouts or range periods.
USA markets open – 14.30 GMT USA markets open. In this period trend is formed again and the next several hours continue. This is USD trading time.
USA session consolidation – this is a period which starts from 18.00 and the next several hours’ volatility decrease till the USA market close and Asia session open.
See image below:
One of the main advantages of day trading in foreign exchange (forex) is that the trader can trade all 24 hours in a day. However, a trader is likely to make money only when there are a large number of transactions in the forex pair in which he is trading. Many traders want to find out the best time to trade forex GMT, especially for the popular EUR/USD forex pair. During these hours, the forex pair should be volatile enough, so that the profit generated is more than commission or spread which has to be paid to the broker. Since working long hours can reduce the efficiency, the traders will usually determine the period when the forex pair will fluctuate most and then trade only during these three to four hour periods.
Market timings, EUR/USD price Volatility and EUR USD intraday strategy
During the week, the forex market is open all the 24 hours a day, since time zone differences ensure that a global market is always open. However, traders should be aware that the forex pairs which are traded in each of the forex markets will be different. Hence the peak time for the activity for each forex pair will be different. When the European forex markets are open, forex pairs with the British Pound(GBP) or euro(EUR) are traded extensively. Similar when the United States, Canada forex markets open, forex pairs including the Canadian dollar(CAD) and US dollar(USD) are actively traded. For day traders who are dealing in the EUR/USD pair should know that they will be most active when both the New York and London markets are open. On weekdays, these market timings in Greenwich Mean Time (GMT) are between 0800 and 2200 hours. Tools for showing the timings for forex markets are available.
Acceptable timing for day trading in EUR/USD
There are volatility charts available which show the pip movement for the EUR/USD pair for different hours of the day, in GMT. It is observed that the pip movement will increase significantly starting from 0700 hours daily and continue to remain higher to 20.00 hours. The pip movement for each hour then reduces greatly, so there is less volatility which the traders can profit from. Hence day traders should place their orders between 0700 and 2000 hours GMT. If they trade outside these hours, the pip movement is usually not enough to compensate for the broker commissions. Though the volatility of the forex market varies daily, the timings when the markets are most volatile do not change. In some areas, daylight saving time may affect the trading hours for forex traders.
The ideal time for day trading
Though a forex trader can start trading in the 13 hours starting from 0700 hours GMT, most people have a busy schedule and cannot spend all their time in forex trading. Hence the forex traders would like to find out when the market is most active. Typically the market is most volatile when both the London and New York forex market is open for the three hours between 1300 to 1600 hours GMT according to statistical data available. Since the number of forex trades in both the markets is high, the spreads are the lowest, making it is easier for a forex trader to make a profit since he has to pay lower commissions. Also, the volatility of the forex market is also highest during this period, so it is easier for a day trader to make a profit.
Trend traders need to trade during EU session open and in the period when EU and USA session overlap. Breakouts traders need to wait for important news or period when the trend is consolidating. Scalpers can use Asia session small volatility to make better profits. Of course, all these tips are not rules and different strategies and trading habits can give various outcomes.
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