New York, Tokyo, London, and Sydney are the four most important financial markets in the world. Forex is a 24-hour market because the major financial centers are located in different regions around the globe. Over-the-counter trading is a term used to describe the forex market because there is no central exchange. Foreign exchange trading can be carried out over the counter thanks to a global network of financial firms, brokers, and dealers.
An overlap will have a greater impact on some forex pairs than others. For instance, as New York and London get into their stride, the EURUSD and GBPUSD will witness a rise in volatility.
In the same breath, while the European session is often less active than the US session, the Asian or US sessions are typically the busiest for USDJPY trading. Similarly, a more active market for EURJPY is expected at the start of the European trading day, whereas EURUSD will be less active in the Asian session and so forth.
A large portion of the forex market is made up of USD crosses, and the New York session accounts for 44% of all daily transactions in the currency market.
In the section below, we examine which currency pairings are the best to trade in the morning for those US-based.
EURUSD
During periods of heavy trading activity on the forex market, currency pairs containing the local currency tend to have a significant increase in trading volume.
Based on this logic, the best time to trade the EURUSD currency pair is when both the European and New York sessions are open at the same time. As a result, the EURUSD makes for an excellent day trading pair.
From 8 a.m. until 11 a.m. Eastern Standard Time, London and New York markets are in sync (EST). The top two major forex trading hubs are both open for business during this overlap period, making it a vital time for forex trading. Euro-based currency pairs are the most liquid at this time of the day because of the high volume of trade.
As the most actively traded currency pair, EURUSD brings together the world’s two major economies. Traders who wish to move money out of dangerous positions employ the euro-dollar currency pair because of its high volume and good liquidity.
GBPUSD
Foreign currency traders frequently deal in the pound-to-dollar exchange rate. Day trading the pair is becoming increasingly popular because of the tight spreads, high volume, and high volatility.
Day traders should place their trades from 06:00 to 16:00 GMT. Trading outside this time bracket comes with an increased risk that the pip movement won’t be enough to cover spreads and trade commissions.
If possible, you should limit your day trading of the GBPUSD pair to the hours of 0800 – 1000 GMT or 1200 – 1500 GMT at the most. This will help you to increase productivity. Spreads and commissions have the least effect on prospective profits at these times because the market is experiencing its biggest moves of the day.
During these times, the markets of London and New York are also open. Spreads tend to be the tightest during this period because of the high volume coming from two main markets.
Timely analysis and forecasting of market movements driven by positive or negative economic data from the UK or the US might be useful in determining the direction of the market.
EURGBP
EURGBP remains a significant and financially rewarding currency pair for traders, despite the absence of the US dollar. This is particularly true in light of Brexit and the growing economic gap between the two economies.
While trading the EURGBP, it is best to take advantage of periods of high volatility. In general, the pair is most active between 06:00 until 16:00 GMT.
Traders who want to time their positions around changing news and events may find this currency pair appealing due to increased volatility and high trading volume caused by political and economic tensions between the United Kingdom and Europe.
It is not by chance that the EURGBP pair is the fourth most-traded pair. Due to its low spreads and relatively low volatility, coupled with high liquidity, the currency pair is worth trading.
The best EURGBP spreads may be found during European trading hours, so keep this in mind.
USDCHF
Although the euro is the most widely accepted currency throughout Europe, Switzerland uses the Swiss Franc (CHF). Outside Switzerland, the primary reason people invest in CHF is to safeguard their money from market volatility. The Swiss franc (CHF) is widely regarded as a currency of “safe-haven” value.
Because of this, the CHF tends to rise in value when risk currencies fall. On the flip side, It’s not uncommon for CHF values to drop when other currencies are growing.
Understanding the Swiss economy and the currency is essential to USDCHF day trading. Switzerland is well-known for its neutrality during Europe’s great conflicts.
At what time of day or night should one consider trading the USDCHF pair? Often, the biggest daily swings occur when economic data from the Eurozone and Switzerland is announced and when stock, options, and futures exchanges start for business.
The vast bulk of Eurozone and Swiss economic data is made public between the hours of 2:00 a.m. and 5:00 a.m. ET in the US. The interval between 30 and 60 minutes before and one to three hours following these releases is a popular trading window for CHF crosses.
At 8:30 and 10:00 a.m. Eastern Time (ET), the U.S. releases its economic data, which generates significant CHF trading activity and a high probability of trending movement.
In summary
There is no doubt that success in the Forex market is built on a foundation of dedication and persistence, from education through strategy formulation. In addition, timing is extremely crucial, perhaps much more significant than most people realize, as it allows you to pick the optimal times to enter the market.
