As you know, the Forex market is open for 24 hours a day, 5 days a week. Since it is a truly global market, it is always business hours. However, you’ve probably noticed that volatility isn’t always the same. There is greater volatility at specific times of specific days, which are therefore the best days of the week for trading the Forex market. Knowing when to expect volatility will give you a huge advantage in optimizing your trades.
The days of the week
Volatility in the Forex market creeps in slowly from the beginning of the week. From late Sunday to Monday there is a slow development of activity. On Tuesday, activity peaks. Volatility decreases slightly on Wednesday, before increasing to its highest level on Thursday. Friday follows close behind, ending abruptly at 5PM as the market goes dormant for the weekend.
Currency pairs
Since time zones differ widely, different currency pairs will have wide-ranging peak times. The following table from Admiral Markets captures the pip range for major currency pairs:
Pip range serves as an indicator but not a perfect measure of market volatility.
Sunday and Monday
Since New Zealand and Sydney start the week while it is still Sunday night throughout most of the rest of the world, the Forex market starts trading early. However, because it is only a few currencies that have gotten underway, there’s little volatility and not much point trying to trade then. Monday creeps in slowly as well. Generally, the beginning of the week is not the optimal time to trade Forex.
Midweek
Activity picks up suddenly on Tuesday, when traders have a better grasp of the state of the market. There is generally a market volatility of 120-130% of what it was on Monday.
On Wednesday, a phenomenon known as “swaps” occurs, leading to a dip in volatility. Swaps refers to overnight interest paid to traders who hold their position between daily sessions.
Holding a position at the close of Wednesday’s session accrues a ‘triple swap’. However, that is usually only if the position in question was open over the previous weekend.
Thursday
On Thursday, volatility is back in full swing, making it the optimal day of the week to trade Forex.
Friday
Friday is not far behind. Because trading on currency pairs that are popular during the Asian and European sessions overlap, the market stays almost as volatile as it was on Thursday. This is mainly during the first half of Friday. On Friday afternoon, there is a significant drop in volatility. Trends that may have been followed through the week can change, if traders close their positions to avoid weekend risk.
To summarise, the best days of the week to trade Forex are Tuesday and Thursday. Monday is slow. Friday is unpredictable. Wednesday experiences a slight drop. Bear this in mind when you are deciding on a trade, and be patient – trading at the right time can vastly improve your fortunes.
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You are correct , Tuesday and Thursday are the best days to trade .