The Forex market is the most active and liquid financial market in the world, but not all hours are equal when it comes to trading. Knowing which times to avoid can make the difference between a successful trading day and a frustrating one. In this article, we will focus on the hours when trading is not advisable, particularly between 22:00 and 00:00 GMT, a period characterized by low volatility and limited opportunities.
Why Avoid Trading Between 22:00 and 00:00 GMT
From 22:00 to 00:00 GMT, the only market open is Sydney, in Australia. During this period, volatility is minimal as other major financial centers, like London, New York, and Tokyo, are closed. This means that the number of active participants is very limited, reducing trading volume and volatility. In other words, the market tends to move slowly and unpredictably.
In Forex, volatility is often necessary to generate profit opportunities. Without movement, the risk of entering unprofitable trades increases, especially because spread costs can have a more significant impact due to the lower liquidity. In an environment with little price action, trading strategies tend to lose effectiveness.
Comparison with the Most Active Hours
The London and New York sessions are the most active, and their overlap, from 13:00 to 17:00 GMT, is considered the best time for trading. During this period, there is maximum liquidity and a high number of participants, which ensures tighter spreads and better trading opportunities.
In contrast, during the Sydney session (especially from 22:00 to 00:00 GMT), the market is characterized by sideways movements, with a significantly lower trading volume compared to other sessions. This can lead to unpredictable and sudden price movements, which do not offer many profit opportunities.
Corresponding Time in Italy
It is important to consider the time zone, especially for those trading from Italy. The 22:00-00:00 GMT timeframe corresponds to between 23:00 and 1:00 in Italy (standard time), or between 24:00 and 2:00 during daylight saving time. This means that Italian traders would be operating during night hours, with all the limitations that a low-liquidity market entails. Considering the time zone difference, it is clear that this period is not optimal for those who want to trade Forex effectively.
Recommendations for Trading
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Plan Your Trades: Focus on times when there is more market activity and movement. The overlap between the London and New York sessions is often the most favorable for finding profitable trading opportunities.
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Monitor the GMT Time Zone: The Forex market follows the GMT time zone as a reference. Make sure you know the local time corresponding to each session to avoid trading during periods of low activity.
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Avoid the "Dead Market": During the Australian session, especially between 22:00 and 00:00 GMT, the market is often referred to as "dead" due to low volatility and reduced liquidity. During these hours, trading could be costly and unprofitable.
Conclusion
Forex trading is closely linked to choosing the right time. The hours between 22:00 and 00:00 GMT, when only the Australian market is active, are among the least recommended for trading. Low volatility, reduced trading volume, and less competitive spreads make this period unfavorable for seeking profits. Focusing on the times of maximum overlap between the major market sessions will provide better opportunities and reduce the risk of unprofitable trades. Strategically plan your trading and always keep an eye on the GMT time zone to maximize your profit potential.
All our EAs use a News filter and a time function that suspend trading during the most risky hours.
