Most Forex traders in South Africa already know that the best time for Forex trading is between 10 AM to 4 PM South African Standard Time. But not many of them know the reasons behind it and it should not be taken as a law. A trading strategy is basically what constitutes the main factor behind the best time for Forex trading. In general, there are several things that determine the best time slots for trading various financial instruments on capital and securities markets. Furthermore, Forex trading sessions and NASDAQ trading hours will be different for South African traders. Therefore, you need to read the guide below to decide when should you start and end your trading day.
We have 3 major Forex trading geographic markets which take place in different parts of the world. The London trading session, the United States trading session (many will also account Sydney Australia session) and the Asian trading session all start and end at different times. You should look where they overlap in order to identify the best time to trade Forex in South Africa.
The reason why we look at the overlapping hours of three major geographic centers of Forex trading is simple: during these periods Forex market is the most active. Due to different time zones, when one market opens soon the other one will close. But there are in-between episodes where markets overlap and are open at the same time. During these times, all major banks, financial institutions, and retail traders will be operating making the market extremely dynamic and further volatile.
The Asian market is the very first one to open at the beginning of the week. Tokyo opens the first Forex session before two other major markets follow it later. Therefore, professional traders will wait for the Asian session to start and will base their strategies on the trade momentum in the region to predict the future market dynamics. However, it has to be noted that only 6% of overall daily Forex transactions take place during this period. The Asian session starts at 02:00 Monday, in South Africa, which is way too late, and therefore not many South African traders are active during this period.
Now, almost 34% of the overall Forex transactions take place in the London Forex trading session. It is the largest and maybe the most significant session worldwide and that is why most of the largest banks globally have their dealing desks in London, United Kingdom. It also is the most volatile session compared to the other two geographic sessions that we mentioned before. The most significantly affected assets are EUR/USD and EUR/JPY during the London trading session. The session starts at 10 am South African time which is highly convenient for South African traders and that is why most of them will choose to trade Forex during the London session in South Africa.
The New York trading session is the final market to open for trading taking over 16% of the Forex daily transactions. It is the second-largest Forex trading market and the majority of its transactions overlap with the European session. At this point, the market is the most dynamic. The common trend is that the volatility of the market will slow down as transactions also slow when European traders are exiting the market. The US market opens up at 15:00 South African time. The best time to trade Forex in South Africa is when US and Europe markets are open at the same time that is between 15:00 and 19:00 South African time.
The decision completely depends on your trading style, strategy, and Forex assets that you trade. If you have a higher risk tolerance than average then it is recommended to trade Forex during the most active hours or between 15:00-19:00 SA time. This is when both European and the US markets will overlap bringing the greatest volatility in the currency pairs market. If you are looking for lower liquidity then according to the statistical data, the greatest performance of the European currency pairs is recorded during the 21:00-01:00 time slot (South African time). At this point, you can successfully implement range-bound trading strategies and use indicators such as RSI. For the South African day traders, we recommend trading during the late session in the United States which comes close to the Asian session that is between 21:00 to 09:00 South African time.
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