The choice of trading days can have a significant impact on the success of your strategy. In this FXOpen article, we will identify the best days of the week to trade forex, looking at the various factors that influence daily forex market activity and examining the features, pros, and cons of trading on each weekday.
Overview of the Forex Market Week
Let’s start with a brief explanation of the 24-hour forex trading cycle. The forex market operates around-the-clock, five days a week, thanks to its global nature. This continuous cycle encompasses four major trading sessions: Tokyo, London, New York, and Sydney, each with distinct characteristics.
- The Sydney session starts the trading day anew after the weekend, and it almost matches with the Tokyo session. The sessions are known for their stability, with the Asia-Pacific currencies often in focus. These sessions generally have lower volatility than the London and New York sessions.
- The London session sees high liquidity. It typically sets the tone for the day’s trading.
- The New York session brings a second wave of liquidity. The US dollar is the primary driver during this session, and it’s the most active time for USD-related currency pairs.
Overlaps between sessions provide some of the most active trading hours. The London-New York overlap, in particular, is a prime time for trading due to the simultaneous presence of two major markets.
Mondays typically witness a slow start as traders gather weekend news and assess market sentiment. Experts state that Monday is usually the quietest day of the week. However, occasionally, news over the weekend can make the market significantly more active on Monday. Prices may exhibit high volatility as these developments are digested.
Pros and Cons
Benefits of trading on Mondays include fresh opportunities arising from weekend news and the potential for breakout trades as trends establish. However, a drawback could be increased uncertainty due to weekend gaps. Additionally, liquidity may be lower in the Asian session. Currency pairs involving the USD, EUR, GBP, or JPY are popular on Mondays, as these are widely affected by weekend news.
Tuesday often sees increased market participation and clearer trends as traders react to Monday’s news. This can lead to more stable trading conditions. In fact, Tuesday, Wednesday, and Thursday are considered the best days to trade forex.
Pros and Cons
The major advantages are improved market direction and the lower weekend gap risk compared to Monday. However, traders may take profits or reverse positions on this day. This leads to price reversals, so traders should be wary of sudden changes in market sentiment. Major pairs like EUR/USD and GBP/USD tend to exhibit more predictable price movements on Tuesdays.
Wednesdays are typically marked by mid-week reversals and corrections. Traders who have built positions earlier in the week may take profits or adjust their portfolios, leading to potential retracements in currency prices.
Pros and Cons
The advantages of trading on Wednesdays include market activity and high volatility, which is required for some trading strategies, such as scalping. There are also opportunities to catch retracement moves. However, Wednesdays can be characterised by choppy and range-bound markets with sideways price movements. They make it challenging to execute trend-following strategies. Trading opportunities on Wednesdays can be found in a variety of forex pairs, including pairs involving the EUR, GBP, or AUD.
Thursdays often see the resumption or reversal of trends after a correction in the middle of the week. Traders have time to react to the news and events that occurred at the beginning of the week, which can give a clearer direction to the market. High-impact economic data releases are common.
Pros and Cons
Benefits of trading on Thursdays include clearer market direction and high liquidity, which can lead to tighter spreads and improved order execution. Major economic data releases and central bank announcements frequently occur on Thursdays, making it a day when market volatility can spike.
The possible drawback is that traders should be prepared for sudden news-driven price movements and sometimes increased spread costs during periods of heightened volatility. Pairs affected by significant economic events, such as the USD/JPY, EUR/USD, GBP/USD, AUD/USD, and NZD/USD, may be in focus on Thursdays.
Fridays often see profit-taking and position squaring ahead of the weekend, which can lead to reversals. Friday is usually characterised by high volatility and can be the most volatile day of the week. A major challenge of trading on Friday is that traders aim to close most of their trades. Therefore, prices may move faster than on other days, which makes it difficult to implement trading strategies.
Pros and Cons
On Fridays, early morning volatility can provide attractive trading opportunities. However, liquidity may decrease in the afternoon. Traders who have suffered losses during the week are likely to take a big risk and try to end the week with a profit. It is very important to trade only when you are calm and can focus on the market rather than worrying about your account. Pairs involving the USD and EUR are commonly traded on Fridays, and some traders prefer to close positions before the weekend to avoid weekend gap risk.
Why Weekends Are Not the Best Days for Trading
Weekends are generally not recommended for active trading due to the absence of major forex sessions. Prices can gap significantly from Friday’s closing levels when the market reopens on Sunday.
It’s also important to follow unexpected geopolitical news that may affect the market once it reopens. It’s better to use the weekend to review your trading plan, analyse economic events, and set objectives for the coming week. Anything related to preparation is a good activity for Saturdays and Sundays. Consider using the TickTrader platform to conduct technical analysis both at the prep time and during the week.
Strategies for Different Trading Days
Consider scalping on Tuesdays, Wednesdays, Thursdays, and Fridays when markets are more volatile. The best days for swing trading are usually Wednesday and Thursday, as there is an opportunity to catch trends in the middle of the week.
Position trading can be used on Thursdays when economic events determine long-term trends. Day trading can be beneficial on Tuesdays and Wednesdays when the direction of the market is more clearly defined.
Which Are the Best Forex Trading Days in a Week?
Tuesday to Thursday are said to be the best days for forex trading. Traders are likely to be focused and motivated from Tuesday to Thursday. In addition, the risk of a quick move in one direction is reduced due to the large number of active traders from Tuesday to Thursday. On Monday and Friday, forex prices can move very quickly, making risk management more difficult.
Forex trading requires a deep understanding of the nuances of each trading day. By considering the characteristics of each day and changing your strategies, you can enhance your chances of effective trading in the market. Additionally, using the economic calendar is crucial, as it helps you plan your trades around major economic releases and adjust your risk management accordingly. You can open an FXOpen account and explore the forex calendar.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.