One of the most unique aspects of trading on the forex market is that it is not confined to
specific times, days and geographical barriers. From Sunday at 21:00 GMT/ 22:00 BST until
Friday at 20:00 GMT/21:00 BST, you can access a fast-paced, highly liquid market.
Investing in the market using forex funding at different points of the day, particularly when
different markets are overlapping will provide a whole host of opportunities, and the market
rewards people willing to take a holistic view of currencies and the market forces that alter
However, because of how many more hours there are to trade, there are also situations where it
is not in your best interest nor the best interest of your account to trade, either due to a greater
chance of trade slippage, a more difficult market to read or a greater chance of bigger losses.
With that in mind, whilst there are always exceptions, here are the conditions under which you
should think twice before diving into the market. Often the moves you do not make are more
impactful than the ones you do.
During A High-Impact Fiscal Event
A lot of forex trading takes place in a market that is inherently very liquid and volatile in nature,
but when you are starting out as a trader, there is a certain limit to how much volatility you want
to deal with.
For example, a “mini-budget” that was announced on 23rd September 2023 created a
significant level of volatility in the forex market, particularly for any currency pairs that included
the Great British Pound.
Whilst the chaos is absolutely an opportunity to make money, as is any somewhat unexpected
and dramatic surge in market activity, making moves at a time when the market is rapidly
shifting on a second-by-second basis is somewhat unwise.
Most experienced traders wait until the dust has settled before they start seeing how the market
has shifted and what the new trends are.
Whilst September 2022 was an extreme case, budget announcements are similarly volatile and
this is important to keep in mind when making big trading decisions.
Near Central Bank Interest Rate Meetings
Depending on the schedule of the institution in question, central banks meet on a regular basis
to determine the rate of inflation for a currency and set a bank interest rate to keep inflation
within a certain targeted level.
These moves will have a major and long-term effect on currencies in part because rates of
inflation affect rates of borrowing, cost of living prices and by extension how much a currency is
worth within a currency pair.
They also often contain notes and suggestions about which kinds of monetary decisions will be
made in the future, so whilst the meeting is taking place and in the short time before, it is worth
hesitating on making sudden moves just in case there is a change that causes huge problems
to trading strategies.
As you are dealing with currency pairs, keep track of when central bank meetings and
announcements are set to take place and factor them into your trading plan.
Other High-Impact Announcements
Aside from unexpected fiscal events and expected meetings of central bank authorities, there
are a few other announcements that create a lot of interest and volatility in the market as a
whole, not just in relation to a specific currency and related pairs.
There are a lot of announcements but the three biggest regular ones to be concerned about are:
● Release of unemployment figures and rates as this can affect interest rates in order to
● The consumer price index (CPI), which measures inflation in real terms, as in how the
price of common products and services has changed,
● The gross domestic product (GDP), which is typically used as an overall measure of
Speculation around particular high-impact announcements can lead to a healthy level of
volatility so it can be an exciting market to engage in outside of the few hours when an
announcement is expected, which can often be outright chaotic.
The first few announcements as a forex trader are ones that are best observed rather than
interacted with directly, so you can see exactly what it is like from within the market, which feels
like observing a cyclone from within the centre of its eye.
From late Friday night until late Sunday night, you are unable to trade, which is an ideal time to
recharge your batteries, take stock and make sure you are not neglecting yourself.
Bank holidays should be used in a similar way, even though several forex markets are open
during that time as most bank holidays are not universal.
On days like Christmas Day and New Year’s Day, there will be no market activity, but even if you
can access the market during a bank holiday, there is far less market activity, which means less
liquidity and therefore less action to really invest in.
Make sure you know the bank holidays for the currency pairs you are invested in and factor in
that you may see limited trading activity during that time.
During Illiquid Markets
The 24-hour nature of the forex market can make one think that there is the same amount of
activity throughout the day, but in practice, not all market hours inject the same amount of
liquidity into the forex market.
As you might expect, the overlap between London and New York’s trading sessions (from 13:00
GMT when NYC opens to 16:00 GMT when London closes) is when the market is at its most
hectic, with the most liquidity and most people participating.
By contrast, Sydney never overlaps with the London market and Tokyo does for only an hour, so
you have far less liquidity, especially at the start of Sydney’s (20:00 GMT) and Tokyo’s (Midnight
GMT) trading days respectively.
Knowing when the market is most open for the positions you want to open is key to successful
forex trades, and trading at unconventional times is a skill that you can build up.
Beyond difficulties in reading the market and the risk of slippage, trading at unconventional
times can also increase your transaction costs, which can make many positions simply not
When You Are Chasing Losses
One of the biggest temptations a trader must swiftly unlearn is chasing losses. The term, which
is also used in gambling, refers to times when a trader abandons their conventional strategy in
order to try and make back the money they lost quicker, typically with risky trades.
This almost never works, and when it inevitably fails the losses can spiral out of control
Even if you make money on a risky trade, which can happen at times due to the inherent and
constant flux in the forex market, it is typically not looked upon as a success any more than
hitting double zeros on a roulette wheel is a sign of skill.
In most cases, the best option if you find yourself chasing the market is to stop. Stop trading for
the day and step away from your terminal. Impatience can lead to very costly mistakes and it is
better to realise a small loss and come back tomorrow with a clean slate than let yourself crack.
Setting a sensible loss limit (no more than seven per cent of your account) will ensure that
whatever happens, you have the resources to get back out there the next day.
When You Are Trading Emotionally
Trading plans are essential for a reason and most traders will note that the most important trait
to develop as a new trader is a disciplined attitude, as most markets are pressure cookers and
the intensity can often take people by surprise.
Because wins can become losses in a blink of an eye, it can be very stressful and taxing on
your mind, particularly because most people fixate on losses far more than successes.
Shifting your mindset is essential. Every single trader will have many losing trades, but those
that are successful know that ultimately the results of independent trades are less important
than overall success.
This is just as true if you are on a remarkable hot streak as well. Running with a hot hand makes
money right up until the moment when you lose everything. Instead, pace yourself, reward good
strategy rather than results and relax after particularly good or bad trades.
Be calm and rational when making trade decisions and ensure each choice is independent of
the last and focus on the overall goal of making a profit. Sometimes not making a big trade
makes you the most money in the long run.
When You Fear Missing Out
We have all experienced FOMO at some point or another in our lives, and for traders, that
moment is when people make a big win on a currency pair.
This is exactly the wrong moment to jump in, as you will almost invariably make a considerable
loss by jumping in when it is exactly too late.
Instead, stick to your own approach, and focus on the trades you want to take in the first place.