Forex Trading Hours: When to Avoid Trading

Forex trading is officially active 24 hours a day, 5 days a week. Therefore, excluding Saturdays and Sundays, it is always possible to trade currencies. While this is true, it may not always be advisable. At certain times, practicing Forex trading can be truly unprofitable, if not dangerous. This usually happens when volatility is too high or when liquidity is too low. If volatility is too high, previously conducted analyses lose their value, and the trade is likely to fail. If liquidity is low, the broker - usually a market maker - has difficulty covering the operation and, in response, increases the spread. The good news is that the moments when these unpleasant conditions occur are well known. In some cases, they correspond to well-defined times, while in others, they coincide with events of particular relevance. These are commonly referred to as "market movers". In a sense, Forex trading follows the schedule of the world's major stock exchanges. Liquidity peaks occur during the intersections between European and American sessions, and to a lesser extent, when American and Asian sessions overlap. The time to avoid is at night, or late evening, between midnight and the following day. Firstly, overnight dynamics can hold surprises; secondly, only the Sydney session is supporting the market. Regarding events that cause high volatility, also known as "market makers", the most notable are statements by central bank governors and the consequent announcement on interest rates, the publication of important (and uncertain) economic data, and political elections, especially if the latter are contested and one of the two candidates is feared by the markets. To know the precise date and times of these events, it is necessary to regularly consult the economic calendar.