The Best Time Zones for Forex Trading

Article source:

  • Traders specialising in “scalping” work best in the European and US time zones
  • For short term and position trading the Australasian time zone has advantages
  • Prices can jump on the market opening and to be forewarned is to be forearmed

By Max McKegg

The question often arises amongst retail forex traders as to what is the best time zone for trading purposes. The most obvious answer is either the European or US time zones, because these are the times when the most news data is released, the greatest trading volume occurs and the largest trading movement typically eventuates.

Traders who specialise in “scalping” are clearly best served in the European and US time zones (in fact scalping outside these time zones is likely to be far less productive) but scalping is a form of trading where retail traders are at a tremendous disadvantage to bank trading professionals and very few retail traders succeed over the long term in this endeavour. Normally, the only beneficiaries are the brokerages.
Short term and position trading (as well as medium term trading of course) are where the retail trader has much more of a chance and in all of these trading types, the Australasian time zone has its distinct advantages.


Being far away and removed from the real “action” can be a distinct advantage. Photo: iStock

Imagine a professional football match where the coach and his support staff wait until the actual game has started before analysing their opposition’s strengths and weaknesses, preparing their match strategy and their best game options to employ. It would be “planning on the hoof” and hardly the “ideal preparation” with the end result almost certainly reflecting this. Similarly, a horse race, where the jockey and trainer only discuss/plan how they will run their horse in the race once the starting gates have opened.

These analogies also apply to forex trading, where once the markets open and trading begins (whether that be the start of trading each day in Asia, Europe or in the US) prices move immediately and “race day pressure” is palpable. From a technical perspective, analysing the market once the “battle has commenced” leaves one slightly “behind the eight ball” as far as short term and position trading is concerned. What do I mean by this ?
Located in New Zealand (the first country in the world to start each trading day) my 30 years as a forex professional have shown me the following: With time on my side, I am able to carefully analyse the major currencies and prepare my trading forecasts for both myself as well as all my subscribers worldwide in plenty of time for the start of trading in Asia and Europe; enabling subscribers to capitalise upon trading for the day ahead without any delay in receiving my forecasts (as all the preparation has already been done).Often prices can jump on the market opening and to be forewarned is to be forearmed and as is often said, to submit a forecast too late is as good as not submitting it all.
The legendary US stockmarket investor Warren Buffet has based himself in Omaha, Nebraska for his entire career, rather than in New York city where many of his counterparts reside. A key reasoning for this being that he does want to be blinded by the “noise” inherent in being at the centre of market activity. Many great traders in the US have long adopted a similar approach.
Being far away and removed from where the real “action” occurs can be a distinct advantage, giving one “time and space” to formulate one’s trading forecasts without any undue influence and “noise” which is pervasive once trading is in full swing!
– Edited by Adam Courtenay