Why Not Trade Forex on Mondays?
Why not trade Forex on Mondays? Some currency traders choose to trade only on Tuesdays, Wednesdays and Thursdays. However, the first Friday of every month is a non-market day. Whether to trade on Mondays is entirely up to you. Here are some of the reasons why. Read on to learn more about the advantages and disadvantages of trading on Mondays. Here are some tips:
A good reason to avoid trading on Mondays is that the currency market does not reach its peak liquidity on this day. In addition, the market is unreliable during the weekend, so many expert traders do not enter trades on Mondays. If you are a full-time forex trader, however, you can trade on Mondays. If you re a scalper, you should avoid trading on Mondays because the market is unpredictable.
Another reason not to trade on Mondays is that the US government s Non-Farm Payroll NFP number will come out at 8:30am on Tuesday. This number is an important gauge of employment in the US. It excludes the agricultural sector, which tends to be seasonal. This encourages greater volatility in USD currency pairs. However, if you re a long-term trader, it s a much less important metric.
One reason not to trade on Mondays is the fact that there are dozens of economic releases every week, in every time zone, which affect all currencies. Traders should be paying extra attention to these news releases. The more economic growth a country experiences, the more positive its outlook is with international investors. This leads to investment capital flowing to that country s currency. This in turn helps the currency exchange strengthen. There s no better reason than these.
Traders should also keep in mind that the Asian markets overlap with the European markets at different points. This overlap occurs between 12:00 and 7:00AM on Tuesday. This overlap will not be as great as the London/New York overlap. The forex market reaches its peak liquidity on Tuesday. Traders should lock in most of their trading during the middle of the week. When trading on Friday, the focus tends to be on closing positions, adjusting positions and starting new directional trades. This leads to erratic moves and a thin market. Further, it results in wider spreads.
During the winter period, the market hours are pushed back by one hour. By doing a Google search, you ll be able to find the time difference in different time zones. The question of whether or not to trade on Mondays will ultimately depend on what currency pairs you re trading. Some people suggest trading on Fridays, but long-term traders are better off trading on Mondays. This way, they can take advantage of low volatility and maximize profits.
In addition, currency trading during the week is prone to less volatility during the week. For example, the Australian dollar is 0.25% lower than the U.S. dollar, and the European currency, the Turkish Lira, is overvalued and has a high risk of devaluation. Carry traders are unlikely to enter these risky currency pairs. The same holds true for other currency pairs. The only exceptions are Tuesday and Thursday, when the volatility is highest.