Trading forex may seem like a guessing-game, but it really is an exact science. In order to make the right trade and maximize your profit, there are many factors that must be considered before action is taken. Every investor needs to know when the markets are most and least active. And, with four major forex exchanges – New York, Tokyo, Singapore, and London, figuring out what time to trade can be difficult as well. Here are the best times to trade forex:
New York/London: 8am – 12pm EST
Obviously, the best times to trade are when the markets are busiest. Between 8am and noon, both New York and London exchanges are active. More than fifty percent of all trades happen within this time frame thanks to these two markets. The important thing to remember though, is that best times don’t always equal most profitable times. Think of the 8am-noon timeframe as the few moments you have to “set the table” for future trades and profits. This is regarded as the busiest trading time in forex between the two largest financial centers.
Tokyo/London: 3am – 4am EST
Tokyo has a reputation for being the easiest market to trade. The ability to lock in trades in under five minutes is a huge reason why investors love this market. Traders are likely to see a flurry of action in this limited time period with two huge markets active. European traders have just begun their day at this point, and look to these two markets to set the tone. While it’s not quite as active as the New York/London time frame, this is one of the best times to trade.
On the other hand, there are a few times that are not ideal for trades. For instance, between 5 and 6pm EST, Singapore is the only active major exchange. One active market means extremely limited movement and profit. Whenever upheaval is in the air, financially or politically – investors are wise to hold on to their assets.