The forex market is open 24/5, meaning that it is available to trade at any time of the day. But what are the best days of the week to trade Forex? Market volatility especially in FX fluctuates throughout the week and in general, some days show more activity than others. Depending on your trading strategy, intraday fluctuations may not interest you so much, but for most forex traders, it is important to know the advantages and disadvantages of trading forex on a specific weekday and how your positions may be affected.
Note: This article is written from the European (GMT) perspective so you should consider your local time zone. For example, the peak time for trading is between 1 and 4 pm GMT, when the UK and US sessions overlap. If you are in Asia however, this will take place for you later in the evening.
Due to the different time zones of exchanges operating around the world, trading sessions overlap and therefore the start of the trading week kicks off with the Asian sessions. The European sessions do not begin until Monday morning local time and so before that, the market movements are generally a bit sluggish. On the other hand, a dramatic start to the Asian session can intensify matters when UK and EU exchanges start to open. Traders in these regions will usually wait to analyse the overall market situation before taking any positions.
Markets open on Monday after a break over the weekend. Hence, if there has been impactful news while markets are closed, the opening may be more volatile and will likely open with a gap – the difference between the Friday closing price and Mondays' open.
The middle of the week is generally considered to be the best days to trade forex, as this is when the most price action takes place. A lot of forex trading experts will say that the best days to trade forex are Tuesdays and Thursdays as they tend to experience the most volatility and intraday movements.
Volatility may slow somewhat on a Wednesday due to swaps being taken in the traditional market. (note: traditionally, triple swap payments were incurred on a Wednesday to account for trades left open over the previous weekend, however at FxPro, the triple swap applies on a Friday just before market close)
While the first half of Friday can often see just as much volatility as midweek, volumes tend to drop off later in the day, in anticipation of the weekend.
Towards the end of Friday, many traders will close out positions to avoid weekend risk. It is not advisable to open trades late on a Friday just before the market closes due to reduced liquidity.
You should also be aware of the high impact NFP (Non-Farm Payrolls) data from the US, which takes place on the first Friday of each month and can cause big price swings and volatility across USD markets on those days.
As we mentioned, the Forex market is open 24/5 covering all exchanges and may show general patterns on certain days of the forex trading week. This can also apply to other instruments of course, but perhaps to a lesser extent, or in a more predictable way. For example, when trading Stocks, the specific exchange is open for a fixed number of hours each day and will be less affected by other markets. This of course is completely subjective depending on the current market situation and the specific asset in question.
We recommend monitoring and practising on a demo account as well as researching the instrument to be aware of upcoming news or data releases during the week. Bear in mind as well that FX exchange rates may impact you even if you are not trading currencies. Let's say you trade Crude Oil in a GBP based account; Crude Oil is denominated in USD, therefore, fluctuations in the exchange rate of GBP/USD will affect your Profit/Loss conversion.
Another thing to consider is any important economic data releases or high impact news that the market may react to that day. We discussed above the NFP (non-farm payroll) data which is released on the first Friday of every month, however other high impact news, such as FOMC (Federal Open Market Committee) is on a Wednesday evening. Although many news releases come out on a specific day of the week, other events may not be scheduled. For example, an unexpected political speech or event.
Whilst some traders actively react to Economic news releases, to try and catch the emerging trend or spike, this can be risky. Any news, but especially those considered high impact, can considerably impact FX rate volatility, in the run-up to, and the moments after the event, causing large moves in either direction. It is important to be aware of this and use effective risk management techniques in your trading strategy, to avoid unexpected stop-outs.
Keep up to date with all upcoming data releases with our Economic Calendar.
In stock trading, a company's earnings reports will have a significant impact on price action in expectation of, and in reaction to the results, so the earnings calendar is something to keep an eye before planning on the best day to trade a particular stock.
Something else which may seem obvious, but could easily take you by surprise, is any regional public holidays or events which cause certain markets to be closed or operate with altered hours. For example, on 4th July (United States Independence Day) exchanges close and the US stocks are not tradable. Market holidays can also affect other assets, like the previous example, a public holiday in the US may cause low liquidity in other markets, as fewer people are trading.
When markets are closed, it is not possible to close or open positions and this may affect your trades. Keep up to date with all market holidays in our useful holiday calendar.
Whilst certain days of the week have more price action than others, especially in Forex, this is not a reason to enter or not enter a specific trade on its own and should be analysed in conjunction with other factors based on your specific trading strategy and style. Opening a FxPro demo account is a great way for newbies to monitor price movements and determine the best days of the week and times of the day for trading.