There are two times when the market is potentially most liquid for forex trading and certain times when you really shouldn’t be trading at all.
Best time of day to trade Forex
The best times of day to trade Forex is the open and close – when everyone else is trading.
This is because the better the liquidity, the better orders are filled and there is some momentum and trend to the intra-day market.
The two best times are generally after the other financial (stock/commodity/fixed income) markets open in London and New York.
To a lesser extent, the markets are also more liquid around the close.
Throughout the rest of the day, the best forex brokers will always have good liquidity for traders.
Worst time to trade forex
The absolute worse time of day to trade Forex is just before economic figures like the ECB rate decision or the non-farm payrolls are announced.
The markets are always fairly illiquid some time before are forex traders flatten positions. Economic figures can seriously move the market with very thin volume.
If you are day trading the FX futures listed on the CME (you won’t through spread betting or CFDs) liquidity can be next to zero as bids and offers are pulled above and below the market. This will then be replicated in the prices quoted by the spread betting firms. After all the top spread betting firms tend to try and hedge all positions nowadays.
This means you can end up getting stopped out through your price with bad slippage (unless you are using a spread betting guaranteed stop). Economic figure releases also skew trends and make the market very unpredictable. If you are trading the forex market in the short term (intra-day) it makes more sense to stick to the most liquid pairs and market hours.
If you take a longer-term view there are always opportunities int he exotic forex pairs. Just beware the more exotic the wider the spreads.
When should you trade Forex?
Quite frankly whenever you want. The market is there and it’s there to be traded, beaten, outperformed, hedged and enjoyed. If you fancy it, trade it. But go in with your eyes open. If you want to try and make some money why should the European regulator (ESMA) insist on scaring you with other peoples CFD trading losses? After all, maybe you’ll be part of the 20% that makes money.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
