Trade Forex Trading

When Not to Trade Forex

There are specific times when Forex trading should be avoided due to market illiquidity and unpredictability. Illiquidity refers to reduced trading activity compared to regular sessions, making these periods unsuitable for trading.

  • News Time

Scheduled important news announcements are made at various times during each month. You can find these ahead of time on a Forex Calendar.

There are 3 categories of news: yellow, orange and red, each category having a different impact. High impact fundamental news can really move prices, sometimes causing a market spike in both directions, before heading and moving towards one direction. These are high risk times where a lot of people get stopped out.

News announcements alone do not sway the market. Market views and guesses about the data can shift prices early. Skip trading during news times for safety.

Guide on Trading Around Financial News Events

Major fundamental news events, like NFP or interest rate decisions, can lead to extreme market volatility within seconds, posing significant challenges for traders.

Economic data can lead to substantial speculation, and consequently, considerable price fluctuations.

  • Weekends

A lot can happen over the weekend leading to the market opening with a large/big gap. This can cause a big/large difference in your account.

  • Market closing times- NY closing

As the trading session concludes, numerous open positions undergo either closure or rollover (swapping). This activity typically precipitates price fluctuations in the currencies, potentially leading to erratic price movement.

  • Asia Market

Asian session sees low volume. Prices range 20 to 30 pips. Trading gets tough as action stalls. Skip it unless you trade JPY or AUD pairs.

  • Holidays

Don't transact during Holidays. This is because the Banks are closed and therefore less participants in the market. If banks close for a holiday then the volume of trade transactions carried out is greatly reduced. This can lead to low market volatility.

During holidays such as Christmas and New Year's, traders should not trade: instead, they should take a break during Christmas week until the time of New Year's, specifically date 2, when banks start trading again. An Economic Calendar will show the bank holiday schedule, so traders can stay informed about these market holidays: Here's an Example of a Financial Economic Data Calendar.

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