Forex is active 24 hours a day and retail Forex trading functions 5 days a week. So you can trade anytime during the market hours.
But, should you just trade any time without considering what day of the week it is? Does the Forex market function the same way every day of the week? No!
In Forex, volatility doesn’t remain constant. It changes throughout the day, throughout the week, throughout the month and even throughout the year.
If you have been trading already for a while, you might have already observed that market behavior is not the same every day. It is very easy to notice the best days of the week to trade Forex.
So, doesn’t it mean that you should not trade apart from these best days of the week to trade Forex? Not really. But if you are a new trader, it is best to stick with these best days of the week to trade.
In this article, we will see what those best days are and why they are the best. We will also see how volatility decreases and increases throughout the week.
Trading on Mondays
When we observe human behavior and the behavior of the Forex market, we can see some similarities. How active you are within the first one hour of waking up? You are probably sluggish and do not show much movement.
Retail Forex market sleeps during the weekend but wakes up on Monday. To be precise, it becomes active when it is still Sunday night in Europe. But it is already Monday morning in Australia.
Surprisingly, the Forex market once it wakes up acts exactly the same way a human being would act after waking up. Yes, it is very sluggish and moves with low volatility.
Weekends do not have much economic activity. So it will take time for the market to adjust to new conditions when the market opens on Monday.
So, if you are in Europe, Sunday night or the first half of Monday isn’t a good time to trade. When the market itself is not sure, how can you be sure?
It is better to wait until economic news and macro data. They increase the volatility and that is when many traders begin their week.
Trading Forex during Mid Week
In searching for the best days of the week to trade Forex, we have now come to a golden spot. The mid-week is when most of the action happens in Forex.
Generally, Tuesday is considered as the best day of the week for trading. The volatility is at its peak on Tuesday.
During peak hours, there is a lot of traffic on the road. People are in a hurry, going for work and actively moving forward. Tuesday is exactly like that in the Forex market.
By Tuesday, traders would have formed their opinions and are beginning to take positions in the market. So, never skip trading on Tuesday! Your important trade for the week may happen on Tuesdays.
We have the answer for the best days of the week to trade Forex right here! They are Tuesdays, Wednesdays, and Thursdays.
The pip range and volatility is more on these three days. You need to be more focused during mid-week, to make sure you don’t miss the best trading setups.
Trading on Fridays
Let us go back to the example of human behavior. Just like human beings are sluggish as soon as they wake up, they are also not interested in many actions when they are about to sleep?
So, does Friday come under the best days of the week to trade Forex? Friday is better than Monday but not really the best day.
If you want to trade on Friday, make use of the first half of the day. That is when a lot of actions happen. Unless you know what you are doing, never trade during the second half!
During the second half, the traders begin to close their positions. So the price tends to fluctuate a loss, stopping you out from trades very quickly.
Also, on the first Friday of every month, the U.S. non-farm payroll (NFP) report is published. Because of this, there may be major swings on all pairs related to the US dollar, on that day.
If you only have three days a week to trade, pick Tuesday, Wednesday and Thursday. If you trade when there is more action, you will see better results.