In the fast-paced world of trading, timing is everything. Hours or even minutes can make the difference between a successful trade and a missed opportunity.
So when is the best time to execute trades? To answer that question, Forex.com conducted a survey involving 3,000 experienced traders globally. These traders come from diverse backgrounds, spanning different regions, investment horizons, experience levels and asset classes.
Here are some insights into what the survey revealed — and how you can use this to your advantage to find the most popular and opportune times for executing trades.
This article is written by a Financial Horse Contributor.
The first hour of the trading day is the most favoured time to execute trades globally
Don’t underestimate the power of the first hour.
According to the survey results, the first hour of the trading day emerges as the most favoured time to execute trades, regardless of the asset class. 35% of respondents chose this window as their favoured trading time.
The last hour of trading day is also popular, with 30% of respondents choosing this window. Trading in the middle of the day is the least popular window. The period after lunch but before the last hour of the trading day is the least preferred time for trades among all asset classes, with only 16% of traders selecting this timeframe.
Looking at the survey respondents by region reveals interesting differences in preferences.
37% of traders active in Asia-Pacific are most likely to place their trades in the first hour of the trading day. On the other hand, 34% of European traders prefer the last hour of the trading day.
Long-term traders tend to execute trades during the first hour of the trading day
Long-term traders, whose trading timeframe spans weeks to months, are most inclined to execute trades during the first hour of the trading day, with 39% favouring this window. This is slightly higher but aligned with the broader global trend.
Meanwhile, short-term traders, whose trading timeframe spans hours to days, are least likely to execute trades during the first hour of the trading day. Their trading windows are more relatively spaced out – suggesting the preference to capitalise on short-term volatility in the markets.
Interestingly, the survey revealed a correlation between trading experience and preferred trading times.
Traders with extensive experience in the market tend to prioritize trading during the first hour of the day. This may point towards their confidence and ability to quickly analyze market conditions and make informed decisions.
On the other hand, traders with less than 10 years of experience show a preference for the last hour of the trading day.
Forex Takes the Lead
Among the various asset classes, Forex traders exhibit a distinct inclination towards the first hour of the trading day. This finding emphasizes the unique characteristics of the Forex market, which operates 24 hours a day, five days a week.
Additionally, FX traders are least likely to trade after lunch but before the last hour, suggesting a focus on early opportunities. The early morning hours present a prime opportunity for Forex traders to react to overnight market developments and align their strategies accordingly.
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Don’t only look at daily patterns
Aside from daily timing patterns, traders should also consider seasonal trends, says Michael Boutros, a Senior Technical Strategist at FOREX.com.
“For example, the holiday season might see reduced trading volumes and increased market volatility, presenting unique opportunities for risk-aware traders. Additionally, geopolitical events and economic indicators can create fluctuations in global markets, demanding cautious and strategic decision-making.”
On top of that, it’s important to remain diversified across asset classes and geographies. This allows you to avoid concentration risk.
It also gives you the ability to use different time zones to your advantage and capitalise on favourable trading hours in each region.
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