A question that has many traders specialized in the Forex market is whether to open a position when any of the major exchanges like the New York Stock Exchange opens its daily session.
The fact is that during these periods is when the trader can get the biggest gains since these are the moments when the main future and stock exchanges open, there is a greater market participation of companies, institutions, funds and traders, and therefore there will be a higher volume of transaction in the markets including Forex.
Thus, with the increase of trading volume, the intraday trends are formed and the more experienced traders try to participate as these trends present the best opportunities to generate high profits. Therefore, it appears that the best periods for Forex trading is when most of the markets are active, including stock markets from various countries around the world, and this adds even greater transaction volume, which in turn increases the chance for the formation of large trends.
This is why experts recommend that the trader should try to participate in the market during the following periods when the biggest trading volume is generated:
- Opening and closing of the main stock markets and other important markets such as futures.
- Overlap of major market sessions from different countries, such as the crossing of the European session with the US session.
The following tool displays the schedules of themost important markets worldwide (including its overlaps):
Considerations regarding the main market hours
It is important to note that it is not advisable to open positions 5-10 minutes before or at the moment of the opening of these markets, as there is a high risk of occurrence of any event that is unknown at the time. The same happens when we trade with fundamental market news.
While we know that when one of these markets opens will be a high turnover, the problem is we do not know in which direction the price will move, and therefore we should wait and try to enter the market a few minutes after the opening, closing and sessions overlaps. In this case, the important thing is to get in the market when there is greater volume.
Another important point is to avoid the market in periods when there is little volume, in which the price move in ranges with a horizontal trend with no particular direction. It is under these conditions that most inexperienced traders lose their money.
Finally, once we identify the periods that offer greater opportunities, we must use tools such as technical analysis to confirm both the direction of the market as the best time to open a position. To this end, we make use of trend indicators, oscillators and other tools to study the market more carefully.