What Is The Best Session To Trade?

The best session to trade has much less to do with time and much more to do with sentiment.
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The Best Session To Trade – It’s A Matter Of Sentiment

We just have a quick question here from Asanka asking, what is the best time to trade during the day? Is there a specific trading session, like Asia pack, the European session, or the North American session that is better to trade compared to the others?

So first of all, thanks for the question, Asanka. Now I think when looking at the various trading sessions, there are a few key general things that we need to consider and remember, such as volatility and liquidity. Now during the Asia pack session, there’s usually far fewer traders compared to the other trading sessions, which means there is much thinner liquidity in the markets.


How Do Different Trading Sessions Affect The Risk Tone?

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How to Trade Sentiment With High Probability?

How To Identify When The Risk Tone Has Changed?

How To Manage A Trade If The Risk Tone Shifts?

Now that means there are going to be a lot fewer counter-orders, and can sometimes lead to very exacerbated moves. Now a good example of this was just this morning, looking at the Aussie dollar versus the US dollar, where we had the announcement from China that is placing some import bans on certain Australian products.

We saw a very quick and fast move lower in the pay, or in the Aussie dollar, which might not have been as big, and might have been more limited if we saw that type of announcement coming through in something like the European or the New York trading session. So that is just one example of how that thinner liquidity environment can sometimes have an effect.

So that is usually the reason why any type of major significant data points from Australia or China or New Zealand usually sees very big moves in the end of the days and other Asian currencies and markets as they are a lot thinner liquidity much thinner much fewer people trading during those types of hours of the day now looking at something like the European trading session there is far more players involved especially since most of Europe is working and trading and there are more news going around across the board.

Now, then you have the overlap period of course as well where North America opens while Europe is still trading now this is usually the most liquid time of the day and usually has a lot of the key or major US economic data points coming out as well. Now from a purely volatility, liquidity and availability of news point of view, the best time to trade would then arguably be the European trading session.

But it’s very important to stress at this time one of the golden rules of trading and that is that the very best time to trade in any particular trading day is when there is a valid reason for us to trade in the first place. So whether you are trading the Asia pack, the European session or the North American session the very best time to trade during any of the sessions where there is a clear and fresh reason or sentiment shift that we can trade from so the session plays a role yes.

But, the more important consideration is the reason why you are trading at that particular time and that should always be based on your fundamental analysis and making sure you are pairing strong currencies against weak currencies based on the current sentiments driving the currency at that time.


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