Every trader should be aware that there are different instruments for trading in the financial markets. This is something very positive, since having a wide range of financial instruments makes it possible to trade in assets that are more adapted to our strategy or our profile as an investor.
That is why it is important to know that each instrument has its own schedule and that in order to obtain good results we must be clear that not all time slots are equally interesting to trade, just as not all days of the week are the same. This will serve for example to try to anticipate a possible gap in the market opening.
But first, let’s get to know the different timetables according to the instrument.
FOREX TRADING HOURS
In the forex market, the hours are the most striking as they are open 24 hours a day, 5 days a week. According to the CET schedule, openings are on Sundays at 23:00h and closings on Fridays at 22:00h. And according to the GMT schedule, the opening hours are on Sundays at 22:00h and the closing hours are on Friday nights at 21:00h.
The fact that the Forex market is open 24 hours a day, 5 days a week does not mean that the level of volatility remains constant at all times, but that there are certain hours when prices move more than others.
Forex is divided into 3 trading sessions: Asian session, European session and North American session. These sessions are commonly known as the Tokyo, London and New York sessions because of the names of the cities where the financial centers of these geographical areas are located.
- In the Asian session, the schedule runs from 23:00h and 8:00h GMT
- In the European session the time is from 07:00h to 16:00h GMT
- The North American session runs from 3:30pm to 10pm GMT
At times of overlap in two market sessions there is more movement and volatility in the currency pairs in those areas.
The Tokyo and London sessions present the best times to trade in the Forex market, and for the EURUSD pair the overlap of the European and North American sessions is the most active time of the day. On the other hand, you should keep in mind that trading during these volatile times can lead to slippage or even gaps or GAPS.
The moments when more trades take place are in the range of 8h to 9h and 14h to 15h, (Spanish time), that is, at the moment of overlapping with the European session and the opening of the American session, so it is a good moment to enter, as it will give us more opportunities to enter.
Best days of the week
Obviously not every day of the week is the same for operating, so some are more conducive than others.
We always recommend to keep in mind when trading the “Forex Calendar” that will indicate which days there are economic news programmed, since these have a very notable weight in the uncertainty, and therefore in the variations and movements of the price.
Trading on important economic news such as the NFP (Non Farm Payrolls) which is always presented on the first Friday of the month, and the US GDP offer moments of great volatility in the markets.
Now let’s see which days of the week are best for trading.
– Monday: Positioning day. The price has to define the trend that will develop during the week, so it is the logins are flatter and gives less opportunities to enter.
– Tuesday: It will depend a lot on Monday, although for those who like to trade in news, this is a day that lends itself to this as Tuesdays are regular news days.
– Wednesday: It is a quieter day than Tuesday but allows us to see clearer positions.
– Thursday: Another interesting day for economic news so there may be important movements.
– Friday: Day conditioned to the results we have had during the week. We will also have another day of economic news.
Important moments for trading stocks.
Opening and closing. Both when opening and closing the stock market, there are moments of great price volatility. These moments are usually minutes after the opening and moments before the closing.
We have to take into account that at the moment of opening we can find gaps or GAPS in the price. For many investors, this is something that they avoid at all costs and for another profile of investor it is an advantage and a very profitable situation.
For the rest of the day have very controlled the Forex Calendar or the economic news calendar to be aware of the events that are waiting to come.
Best months to trade
From the point of view of volatility we will distinguish 3 bands over a year.
1) Period of large volumes and volatility: From January to May
2) Summer is usually a quieter period, from the point of view of trading volume: June to August.
3) Most volatile period: September to November.
On the other hand, December is a month that tends to be out of the ordinary, as volumes drop from the middle of the month, but during the Christmas period the indices tend to rise a lot, helped by the positivity and euphoria of the investors on those dates. It is a phenomenon we know in the stock market as “Santa’s Rally” and the upward trends in the indices are very pronounced, so it is usually a good time for shopping.