One of the main advantages of trading forex online is the flexibility of forex trading times. The currency market is open and accessible 24 hours 5 days a week.
The market opens on Sunday 11:00 PM Nigeria Local time (GMT+1) and closes on Friday 10 PM Nigeria Local time.
Through days in the week when trading is on, there is always at least one market open to business. Forex trading takes place in various countries around the world and as one market is closing for the day another is opening in another part of the world. For this reason forex trading is referred to as a 24 hours currency market.
A forex trader needs to know the forex trading times applicable to the different forex markets and also the best times to trade during the day. Some hours and days of the week are known to present better trading opportunities and more profit.
What Time Should You Trade Forex in Nigeria?
Although the forex market is open 24 hours per day during the work week, not all trading hours and sessions are equal.
To be profitable trading forex in Nigeria, you need to understand the forex trading sessions in Nigeria time, how each session behaves, and the best currencies to trade at particular sessions.
In this detailed guide, we delve not only on what are the best trading hours in Nigeria, but also at what currencies you can trade during each session.
It is also important that you understand market open time on Sunday (if you’re eagerly waiting to trade), and also the best days of the week to trade forex.
Forex trading times differ from market to market or country to country due to the difference in time zones and because the international forex market is linked up not by one exchange computer but by a network of computers.
So when one particular exchange closes the international forex market does not necessary have to close. For example if the US market closes, dollar can still be traded on other exchanges or markets around the world.
The best forex trading times to enter the market is when a number of exchanges or markets are opened and large volumes of currencies are being traded. This occurs at times during the day when the markets of several countries are open.
For each time zone, forex is traded 8am to 4pm and so to get the best forex trading times you need to know when the markets of different countries overlap.
At these times there is more activity and fluctuations of rates and that increases the chances of making better profits. The middle of the week has also been noticed to experience more activity and trading in the markets than other days of the week, specifically Tuesday and Wednesday.
- What’s the Best Time to Trade Forex in Nigeria
- The Importance of Time in Forex Trade Analysis
- Types of Market Analysis
What’s the Best Time to Trade Forex in Nigeria
The best time to trade forex in Nigeria is between 2:00 PM and 6:00 PM, Nigerian local time. During this period, the London and the New York trading sessions begin to overlap, creating a lot of market activity and opportunities. The overlap lasts for the next 4 hours, and this means that liquidity is at it’s peak since these are the two largest trading sessions in the world.
For scalpers, the 4-hour period presents an opportunity to make quick profits since spreads are at an all time low of the day. Additionally, a lot of tradeable patterns form during this 4-hour window.
Day traders can also enter into trades during this period and wait to close when the New York trading session is closing at around 5:00 and 6:00 AM. Nigerian time. We actually find this strategy very workable for professional forex traders who do not need to keep glancing at the charts. (Just remember to setup your alarm so that you can wake up to close the trades if you don’t want to pay swap.)
During the week, the Forex market is open 24 hours per day, but not all times of the day are equal. Understanding why is an important lesson for any trader so that they can adapt their trading style to suit the market conditions.
The Importance of Time in Forex Trade Analysis
Liquidity, or the ability to fill a trade without significant shifts in price, is a key concern when comparing various times of day.
Highly liquid pairs like EURUSD can soak up very large orders without blinking, but more exotic pairs will likely slip more noticeably when a very large order is placed. This is because there are less counter orders in the market, meaning that the large order consumes all of the nearby counter orders at various prices before eventually being fully filled. This effect is exaggerated during low liquidity times.
In reality, the exceptional size of the FX market will mean that the smooth opening and closing of positions won’t be a concern for any but the largest of traders, but what is worth noting is how the behavior of the market changes during periods of varying liquidity.
For high liquidity, there needs to be a large number of orders in the market, so it fits that the highest liquidity periods of the day are when the largest number of traders are active in the market.
Sydney (22:00 – 07:00 GMT)
This is where the trading day and trading week starts, although it is perhaps the quietest of the sessions, apart from an occasional pick up in volatility at the weekly open as traders react to the weekend’s news.
It is also worth remembering that the interbank market can be active several hours before the retail Forex market, so it is possible that there will be large gaps in price when the retail Forex market opens.
Professional traders use NY close charting too, which means that daily candles will begin at the start of this session and close at the end of the NY session.
Depending on the price action, this can also be a source of volatility at the daily open. On the whole, though, liquidity is frequently the lowest until Asia opens. Spreads will be wide and trading is often very slow. The previous day’s moves will typically be consolidating by now, unless there is a major market-moving piece of news. When a big piece of news lands during this session, the thin conditions cause excessive volatility and exaggerate any moves.
Tokyo (00:00 – 09:00 GMT)
Liquidity increases at the beginning of the Tokyo session, as shown in the sessions figure. This activity typically reduces as the session progresses, with America and Europe fast asleep.
The Yen and Australian pairs are often the most active pairs during this session as the Tokyo and Sydney stock exchanges are open. The large moves observed in the London and NY sessions, though, are less common in the Asian session, which makes range-bound and breakout trading more suitable.
London (09:00 – 18:00 Nigerian Local Time)
London dominates the Forex market place, so the larger moves are often started during this session. The London open at 08:00 GMT is often a turning point for the day’s trading activities, and large trending moves can frequently be observed during this session. In Nigerian time, this happens to be 9:00 AM as Nigeria is one hour ahead of the GMT time.
UK and European data is typically early in the London session, so when Asia closes at 10:00 GMT, there can be a slight lull until NY opens (at 13:00 GMT), unless there is a strong trend to keep things ticking along.
New York (13:00 – 22:00 GMT) (14:00-21:00 Nigeria Time)
New York is where the trading day and therefore trading week ends. US data is typically early in the session too, so the crossover from London to New York is one of the most important times of day for traders. Liquidity is at its highest, spreads typically at their lowest and the risk of an exhausted trend reversing is high.
As London closes, what is referred to as the “NY afternoon” begins. The trading activity dies down, but there are still a lot of traders in America sitting at their desks. As such, if an important piece of news hits during this time, it can display remarkable volatility, which again makes news and breakout trading favorable during this quiet period.
Types of Market Analysis
Essentially, there are two headline types of analysis traders can undertake when looking at markets:
- Technical fundamental
- Fundamental analysis
Technical analysis, sometimes split into two types of analysis (technical and price action), is the concept of looking at current and previous price movements to attempt to determine where a currency is going to go. This is done almost exclusively on charts.
The reason most people like this type of analysis is that it is relatively quick (depending on your level of analysis), it presents a good overview, can be shown to work and is typically less subjective.
Essentially, then, the idea is to use previous price movements to predict future price movements. Some say that future price movements are ‘random’ and therefore cannot be predicted from a chart. However, when many, many analysts study the same chart using the same tools, the future price predictions can become self-fulfilling prophecies. This is true more so in Forex markets than, for example, individual equities. These standard tools are really indicators that use the underlying price data to predict price movements based on previous empirical evidence of events reoccurring.
Part of the reason some technical techniques work is that they reflect some underlying movement in the order book. As mentioned above, in some cases this is because if enough people follow the technique, it becomes a self-fulfilling prophecy, so many only work in very specific conditions.
Beyond the price charts, technical analysis also focuses a lot on key levels, turning points and potential ‘plays’, such as ‘if this happens, then this is likely to happen’ or ‘if that happens, then something else is more likely to happen’.
Fundamental analysis is a way of looking at the market by analyzing economic, social, and political forces that affect the supply and demand of an asset.
This should, in theory, be present perfect information, and therefore certainty, but the challenge is that a lot of it is subjective and can be interpreted in many ways.
The idea of all this information is that it translates into underlying orders in the order book and thus creates the real supply and demand mentioned earlier.
There will be more detail on how different market themes can impact the fundamental outlook in greater detail in a future lesson, but for now, the general concept is that if a country’s economic outlook is good, then their currency should be worth more.