Features of Forex trading at night

The Forex market rarely sleeps, and members of the currency trading community are active both day and night. Of course, the volume of transactions decreases somewhat in the dark, but this is not a reason for the complete trading suspension. On the contrary, with the right approach to the trading process, you can make a profit without being distracted by market noise and avoiding high volatility. Let's talk about what features night trading has and determine whether it’s worth to switch to this type of trading completely.

Trading Sessions

Although the Forex currency market works only 5 days a week, the uninterrupted work of the OTC market is ensured due to the presence of several trading sessions.

Recall that in total there are 4 trading sessions in the Forex market, named after the regions in which they are active:

  • Asian: from 23:00 to 07:00 GMT
  • European: from 5:00 to 14:00 GMT
  • American: from 12:00 to 21:00 GMT
  • Pacific: from 19:00 to 3:00 GMT

Thus, traders do not have a break for lunch, rest and even sleep. Of course, this is exaggerated - traders individually draw up a schedule of their work in the market. But in fact, you can trade at any time of the day and the night is no exception.

What is the market at night?

The Forex market at night is mostly calm. During this period, “flat” reigns in the market for the vast majority of trading instruments. The price of assets moves in a lateral direction, limited on both sides by levels of support and resistance, which is only beneficial for traders who maintain calm trading. Moreover, monitoring the market during this period enables traders to predict their future actions.

The lull comes with the closure of the American session. This happens around 21:00 GMT. Traders from Europe are also inactive, because large financial corporations do not work at night. And Europeans and Americans in total is an impressive part of traders around the world. Therefore, the volatility in the market drops significantly. Activity increases during the opening of the market in Japan - this session is characterized by small jumps in the price of assets, which include the Japanese yen. By the way, price fluctuations are unpredictable, even despite the absence of important economic news.

But this is only true if we talk about the medium-term transactions. Nighttime is the most suitable period for scalping. At this time, traders usually apply channel scalping strategies, focusing on support and resistance levels.

Features of trading at night

Traders who decide to enter the market in the dark should take into account some of the features that Forex has at night.

The first thing to understand is that the quietest trade falls during the close of the American session. Between 21:00 and 23:00 GMT, traders have time to “flat” by opening small volume short-term transactions in a relatively calm period of time. It’s impossible to break the jackpot, because there are no sharp jumps, but you can pick up 5-15 points from each transaction. With the right approach to trading, of course. During this period, the most popular are such currency pairs as GBP/CHF, EUR/CHF, EUR/GBP, due to the fact that there is no news on the euro and the British pound at this time of day, in particular.

When the Asian session opens, the market activates a little and during this period some traders choose currency pairs, which include the Japanese yen, as an asset, in particular: AUD/JPY, USD/JPY, EUR/JPY and GBP/JPY. Working with these assets, traders can earn more profit than when working with pairs that include the US dollar or Euro, due to relatively low volatility.

As for the trading methods, scalping strategies are most popular in this time of day. Like it or not, but in the morning, activity in the market increases, and leaving transactions opened for the coming day would be too risky an idea.

Now let’s talk about the choice of a broker. From the very beginning, let’s note that not all brokerage companies providing services in the Forex market allow their customers to make short-term transactions, so scalping strategies may be prohibited. Accordingly, trading at night will become ineffective. You should pay attention to this when choosing a company. In addition, the size of the spread matters too. Often the spreads for some assets, usually the main, increases at night time, which also makes trading uncomfortable. Some Forex brokers hide the spread values at different periods of the day, which is alarming. Other brokers, more reliable companies, on the contrary, openly demonstrate a detailed specification of trading assets.

Advantages and disadvantages of night trading

So, we have come the point, where we will finally determine what advantages and disadvantages night trading has and whether it is worth changing the tactics of trading if it has already been worked out before.

Traditionally, let's start with the benefits:

  • Perfect time for scalping strategies. The thing is that the activity on the market is minimal, and the load on brokers' servers is relatively small due to a significant decrease in the number of traders, the overwhelming majority, anyway, intraday traders. And this means that slippages and other malfunctions in the terminal can be avoided.
  • At night, the rate of assets changes smoothly and therefore it will be easier for beginners to understand the principle of trading and make a couple of successful transactions without being distracted by market noise and monitoring economic news.
  • Due to the fact that the activity on the market at night is minimal, the spread will also not expand, at least significantly, which will save the trader’s deposit.

Disadvantages of trading at night:

  • Trader’s fatigue. Like it or not, but working in the dark is unnatural for most people. Therefore, fatigue can affect, and mistakes in the trading process can happen because of it, which can cost a trader money.

As you can see, among the disadvantages of trading at night only the human factor is present. Basically - trading at night has the right to life, as well as trading in the daytime. The main thing is to choose the correct and working trading strategy and not to choose the wrong broker. And our rating of forex brokers will help you choose a company worthy of cooperation. Our rating experts regularly conduct reviews of forex companies and offer brokers comparison by key features, which will allow all interested traders to make the right choice of the company to make money with.

Author: Kate Solano, Forex-Ratings.com
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