Success, in forex, is all about timing. In this article, we take a look at each of the different trading sessions, and why they are important in determining the best time to trade forex in Nigeria.
Let’s Start From The Beginning
Forex trading is when you exchange currencies, through buying and selling, with the aim of making a profit. In foreign exchange, currencies are traded in pairs whereby the value of one currency is measured and exchanged against the other.
For example, if you buy the currency pair EUR/USD and the value of Euro rises against the US Dollar, then your trade becomes profitable. It simply means you bought the Euro currency and sold the Dollar.
The foreign exchange market is open for 24 hours a day, from Monday to Friday. As such, there are many opportunities for you to enter and exit the market at a time that suits you.
How Does That Effect Trading Times?
To make money trading forex, you should try to plan your trades based on market activity. As such, it’s important for you to know how the forex market works, when each of the different trading sessions starts, and how active the market is likely to be at those times.
There are three main forex trading sessions. These are the Tokyo Session, the London Session, and the New York session. There is also the Sydney session. The time below for each session is based on the Nigerian Time Zone.
This session opens at 12.00 am and closes at 8:00 am. The main participants in this session are commercial banks and central banks. The currencies that are traded the most are the Australian Dollar (AUD), the New Zealand Dollar (NZD), and the Japanese Yen (JPY).
This session opens at 8:00 am and closes at 4:00 pm. This is the most active session on the forex market, due to the large amount of transactions that take place. The currency pairs traded most during this session are the Euro (EUR), the US Dollar (USD), the British Pound (GBP), the Swiss Franc (CHF), and the Japanese Yen (JPY).
New York Session
This session opens at 1:00 pm and closes at 9:00 pm. This is when most economic reports are disclosed. Banks and multinational companies are the major participants in this session. The most active currencies in this session are the British Pound (GBP), the US Dollar (USD), the Australian Dollar (AUD, the Euro (EUR), the Japanese Yen (JPY), the Swiss Franc (CHF), the Canadian Dollar (CAD), and the New Zealand Dollar (NZD).
This is when the Asian trading session starts. This session opens at 5:00 pm and closes at 2:00 am EST. During this session, the major participants are exporters and central banks. Liquidity is normally as there are less transaction compared to other trading sessions. However, there may be some volatility during the Sydney-Tokyo overlap. The major moves can be seen in currency pairs that include the Australian Dollar (AUD), the New Zealand Dollar (NZD), and the Japanese Yen (JPY).
The Best Time to Trade Forex
The best time to trade forex in Nigeria is within the first five hours of the above-mentioned trading sessions. To start, you can try trading on a demo account during the London-New York Session overlap. This is when both the London and New York sessions are open, between 1:00 pm and 4:00 pm. It is also when the market is most active, making it a good time to trade.
Trading on Sundays
Brokers are open during weekdays from 00:00 on Mondays until 24:00 Friday nights. However if you trade with an Australian broker, like Pepperstone, you can actually trade on Sundays starting from 15:00 Nigerian time. During the Australian Summertime, you can start an hour earlier at 14:00 in Nigeria. This is because of the time difference, with trading available in Australia from midnight local time and it still being Sunday in Nigeria.
The Worst Time to Trade Forex
The worst time to trade the market is late on a Friday. This is because there is less liquidity, and less market movement. Another bad time to trade is on national holidays. This is because there is less liquidity, and less overall market activity.
Trading During Market Events
If you’re new to trading, you may want to also avoid trading during or immediately after market news or economic data releases. This is because market news and economic data releases can sometimes trigger periods of high market volatility. The increased volatility can lead to very sudden price movements, and if you’re unlucky, very sudden losses.
In conclusion, forex trading is a great way of earning extra income and in order to make consistent profits, you should know the best times to enter and exit the markets. In addition, you should be disciplined when using your trading strategies, and you should practice on a demo account before trading on the real market.
To learn more about trading, please visit our education section.