Lesson 6: The Best Days to Trade Forex

Do you want to know how to cash in on your trading effectively? Well, one thing you must do is master the forex clock.  

While different indicators show you when to enter or exit a trade, it’s still best to master the forex clock to help you see when the currency fluctuation will happen and be prepared to exploit it.

Lesson Highlights

• The forex market is only profitable if it's volatile. The more volatile the market, the higher the pip value it may have.
• The most profitable days in the forex market are Tuesdays, Wednesdays, and Thursdays because of the market momentum.
• Mondays and Fridays are less profitable due to little trading volume brought by traders who avoid the weekend risks.

Capitalize The Trading Time 

As you know, not every day is the best day to enter the market and trade forex. If you enter trades every day, you’ll most likely waste time, energy, and money. 

So, what should you do? You should analyze the market hours and figure out what time has the most trading volume. 

You see, the currency pairs’ values fluctuate when there’s an escalated market atmosphere. 

Here’s the order in which the market has high liquidity and volatility: 

1. London Session 
2. New York Session 
3. Tokyo Session 
4. Sydney Session 

Another clever way to participate in the market's spike movement is to trade session overlap. As the name suggests, a session overlap is when the closing and opening of two sessions overlap. 

The four major trading sessions have overlapping sessions, and when these happen, you can expect an influx of trading activities in the market. 

Average Pip Values Each Day 

In the past lessons, you learned about the importance of pip values in your trading success.  

Look at the days with the most pip value and incorporate this information into your trading strategy. Remember, the best days of the week to trade forex are when the average pip value is high.

As you can see, the midweek (Tuesday, Wednesday, and Thursday) has the highest pip values. However, what’s up with the start and end of the week?  

Well, Mondays, Fridays, and Sundays don’t have high pip values because they have low trading volume. Too little trading volume equates to low or even dried-up liquidity.  

With these lows, the market will likely be less profitable and predictable. Therefore, Mondays and Fridays are not the best days to trade forex.  

Trading on Mondays is not ideal due to weekend risks. When a fundamental event that affects the market happens during the weekend, you can expect unpredictable market flow that might risk your position. 

So, avoid Monday trading if you don’t want to be welcomed by a sudden and unpredictable market shift.  

In terms of Friday trading, many short-term terms are starting to lock in their profit, which results in dried-up volatility. Also, Friday tends to kill the market's volatility.

Traders tend to be more cautious on Fridays since it’s the last day of the forex week. They may close their position to avoid risk exposure to the potential weekend market event. 

Why Trade During the Midweek?

Traders tend to observe the market on Mondays before executing a trade. So, you can expect fewer actions when you open a position on Mondays.

However, don’t think of this as a missed opportunity. Many profitable traders use Mondays to analyze and see the prevailing market trends. During this day, you research, plan, and strategize your trades for the week.  

Now, the best days to trade forex are Tuesdays, Wednesdays, and Thursdays, or the midweek.  

On Tuesdays, the market goes back to being active because many traders reenter the market on this day. This increase in trading volume often drives Tuesday volatility to 130% higher than Monday.   

On Wednesdays, technical traders expect the market to reverse direction. This midweek reversal phenomenon has led traders to capitalize on the reversal movement by strategizing their positions.  

Lastly, traders tend to take their last position in the week on Thursdays. Fundamental traders know the value of Thursday. On this day, the world’s largest economies tend to publish economic data.  

However, market reversal tends to happen at the end of Thursdays since this day is known to be the last best day of the trading week. If you plan to enter or hold a position during this day, ensure that you consider market reversal in your strategy.

Throughout this module, you’ve learned how to use the forex clock to mitigate risks and yield high returns. In the next module, you’ll walk through the advantages of trading forex compared to other financial instruments like stocks and futures.