The best trading hours depend on the currency pair you choose to trade and on the technical strategy you prefer. It is a matter of personal choice between direction-less or choppy markets and highly liquid and directional markets. In order to make good choices about the time period which is best for one strategy or another, we will present you some general lines of best periods for Forex Scalping.
Generally speaking, scalping needs high volatility, but there are also trading strategies that work on low volatility instruments.
All time periods mentioned in this article are EST (New York Time).
In order to use strategies that need high level of volatility, you need to find the best moments on each exchange. This means that Euro,1 Britain’s Pound and Swiss Franc have high volatility when they are traded on London exchange. And the best moments of the day are particularly: 03:00 AM – 05:00 AM and 08:00 AM – 10:00 AM.
These two hours periods there show specific micro-trends caused by numerous market events and news releases appearing. These intervals are best to be exploited by scalpers because of the rapidly changing conditions and positions that can be used in order to maintain rapid openings and closings that become profitable. As an advice, it would be good to take profit of all strong trends also and exploit it as full capacity.
Moreover, the Australian Dollar, New Zealand’s Dollar and the Japanese Yen have high volatility when they are traded on Tokyo and Sidney exchange. Best times of the day: 07:00 PM – 11:00 PM.
It is advisable to go for small quick trades made successively and to avoid building up positions in order to have the best results.
The Canadian Dollar has high volatility when traded on New York’s exchange. Best times: 08:00 AM – 12:30 AM.
If you are wondering why the American Dollar was not mentioned, let me tell you that it can be traded in pair with the other currencies; its volatility being higher only when indicators of the US economy are published or when it is bought as safe heaven.
Also, important moments of high volatility are those when the macro-economic indicators are published for the each currency. Of course, it is important to know that high volatility is also present when macro-economic indicators with high impact on the previously mentioned currencies are published.
However, if you prefer strategies that use low level of volatility and side-way moves in the market, you definitely have to eliminate the time frames mentioned above. Low volatility can be generally found in all currency pairs, except during the moments of the day we previously mentioned.
Of course, the transaction’s duration should not be influenced by the things mentioned in this article. Each scalper will know for how long to maintain each entry, always taking into account the money management and risk management and being in accordance with the strategy preferred.