But great day traders don't want just "acceptable hours" to trade, they want to be trading the best hours of the day, or the hours that offer the "best bang for their buck. Due to global time zone differences, during the week there is always a market open for business somewhere.
On Sunday night the Asian and Australian markets open first, facilitating trade, then Europe opens, then North America, so there are always traders, banks or business willing to trade around the clock. Therefore, different forex pairs are actively traded at different times of the day. When New York U. The yen is an actively traded currency, and so is the USD, so this pair typically sees relatively stable action throughout the day with a few peaks and troughs in volatility.
Note that there is a shift due to day light savings time. During the summer months northern hemisphere everything slides back an hour on the chart shown.
When day light savings times rolls around, if you are uncertain about when markets open and close, quickly check the above forex market hours tool for confirmation. Movement is relatively stable through much of the day, although there are periods with noticeable drops in volatility.
Avoid day trading during those low-volatility times. As Tokyo winds down, and before London opens, the pair sees another drop in volatility between and Day light savings may also affect these times in your area. Regularly check volatility statistics on Mafaf click on a pair to see an updated chart to confirm which hours are typically quiet or active.
Volatility changes over time. For example, daily average volatility at the time of writing is pips per day. This is quite high historically. Daily average movement could decrease back to 70 pip per day, which means each hour is likely to see lower pip movement. Which hours are most volatile typically do not change, though. The hours discussed above GMT should be avoided for day trading, even if volatility increases or decreases overall.
London and New York are both open for the bulk of this period. Even though Tokyo isn't open, this two to three hour window sometimes volatility is high up till , for a four hour window typically presents the largest price moves of the day. This means greater profit potential, and spreads are also typically tightest during this time. Again, note that day light savings may shift the best times forward or backwards by an hour. Check the volatility stats to stay on top of this.
The time frame above typically sees the most action, but there may be other times that produce good sized moves for weeks or months at a time. Regularly check volatility statistics on Mafaf to see what times of day are most active. Stick to trading during the hours that see higher volatility--the hours that witness spikes in volatility on the chart like the highlighted area on the attached chart.
Trading during this time maximizes profit potential due to the size of the moves, and spreads are typically lower during this time as well. If you regularly monitor intraday volatility, you may find that there are other times during the day which are very active for extended periods, and you may opt to day trade during these times.
Updated August 10, Day Trading Sessions and Impact on Volatility.More...