4 Worst Times to Trade Forex

Some of the least favourable moments to speculate in the forex market include public holidays, the later hours of Fridays, before/after major news, and when you’re not mentally ready.

Let’s explain in detail why each of these moments is not ideal for trading:

1. Just before or after a high impact news

High impact news naturally triggers intense volatility and fluctuations. Trading around this period is very risky.

Though it can work in your favour (make you unexpected profits), it can equally jump your SL, wipe your capital within seconds!

It is recommended that you wait until the announcement is absorbed by the market. You want things to stabilise before you enter.

2. On bank/public holidays affecting major financial regions

Banks are key players in the over-the-counter FX transactions. A national closure can affect the trading volume and price movements of some currency pairs.

It usually results in low liquidity (low trading activity). And the consequence of this reduction is often wider spreads, slippage or gaps.

3. When you’re not emotionally prepared

It is unsafe to trade when you are unhappy, going through stress or desperate to win trades/recover your losses.

Being in these mental states pushes you to make unsound judgements.

Ensure you are in a clear and focused state of mind before engaging in trades.

Get rid of all physical and mental “distractions” first.

4. Late Fridays

It is not uncommon to witness less trading engagement during the last 24 of a trading week.

Fridays can sometimes present a few challenges for traders.

On this last day, the market may be active in the morning, but the volume usually decreases as the day progresses.

The aftermath? High volatility and negative slippage.

In addition, holding positions over the weekend can expose you to “uncontrollable” risks too.

FAQs

Which bank holidays should I be aware of?

You should pay attention to national holidays in major economies: the US, UK, Eurozone, and maybe Japan.

Check an economic calendar regularly so you are not caught off guard.

Will all currency pairs be affected equally by a particular public holiday?

Not really. Currency pairs tied to the nation observing the holiday are usually the most affected.

What should I do if I realise, I’m not emotionally prepared?

Step back. Take a break. Use that time to journal, rest, or review past trades.

Is Monday a good day to trade forex?

It depends. Early Monday sessions (especially during the Asian hours) have been observed to be slow because the market is just warming up. Liquidity builds up later in the day.

Why is late Friday considered a less ideal time to trade?

As the trading week approaches its end, many speculators close their positions to avoid possible risks over the weekend.