As a forex trader, understanding the relationship between the best time to trade forex in Nigeria and the forex market sessions is vital for maximizing your chances of success in the market.
The forex market is accessible 24 hours a day, five days a week, offering traders around the world the opportunity to participate in currency trading. However, it is critical to identify the optimal trading hours in Nigeria to improve your trading strategy and profitability.
In this article, we will explore the best time to trade forex in Nigeria and its significance for forex traders.
Forex Market Sessions in Nigeria
The relationship between the best time to trade forex in Nigeria and forex market sessions is crucial for forex traders who want to optimize their trading strategies and profitability.
Forex market sessions refer to the times when the major global forex markets are open for trading. These sessions are divided into three main regions:
- Asian session. Asian session start from 12:00 AM to 09:00 AM (Lagos time).
- London (European) session. London session start from 08:00 AM to 05:00 PM (Lagos time).
- New York (US) session. New York session start from 02:00 PM to 11:00 PM (Lagos time).
Asian markets contribute approximately 20% of the daily forex trading volume, with significant participation from traders in Japan (the world’s third-largest forex trading center by volume), Australia, Hong Kong, and Singapore. This session is open from 01:00 AM to 10:00 AM Nigerian Time.
The most actively traded currency pairs in the Asian session are AUD/USD, USD/JPY, and NZD/USD, with the Japanese Yen (JPY) and Australian Dollar (AUD) being the preferred currencies. However, the liquidity and volatility in major currency pairs such as EUR/USD and GBP/USD are low for daily trades, making it unlikely for traders to profit by trading these currencies during this session.
The Tokyo forex market opens at 01:00 AM and closes at 10:00 AM Nigerian Time (GMT +1), with the last hour of the session overlapping with the opening hour of the London session. As such, Asian traders may witness breakouts towards the end of the day due to instant liquidity.
News from Japan and Australia can impact price movements during the Asian session. To make the most of the market, it is advisable to monitor the markets during the Asian session and plan trades to align with the overlap between the London and New York sessions.
The European session dominates global financial markets, accounting for 37% of the daily forex trading turnover. London, where almost a third of global trading volume is conducted, is the primary participant, along with Germany. This session commences at 8:00 AM and concludes at 05:00 PM Nigerian Time.
During the London session, the highest volume currency pairs include EUR/USD, GBP/USD, EUR/GBP, and USD/CHF, with the Euro and British Pound being the most traded currencies. The session’s opening hours see the highest liquidity, which results in the lowest spreads. This makes it an opportune time for profitable day trading, with common breakouts and trends in major currency pairs.
News from the United Kingdom and European Union countries such as Germany, France, and Switzerland mainly affect price movements during the London session. High volatility characterizes the opening hours of the session, gradually tapering off around lunchtime and then picking up again at the start of the New York session.
There is a three-hour overlap with the New York session, presenting an opportunity for traders to capitalize on high liquidity and price movements. However, unexpected price movements may occur during the New York lunch hour, as European traders square off their positions at the end of the London session. As such, traders must carefully monitor their trades during this time.
New York Session
Following London, New York is the second-largest financial session globally, contributing around 17% to 18% of the daily forex trading turnover, with major participation from traders in America and Canada. The New York session runs from 02:00 PM to 11:00 PM Nigerian Time.
Currency pairs featuring the USD are highly volatile during the New York session, with pairs such as USD/CAD, EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY experiencing the highest movements. The four-hour overlap between the London and New York sessions is the most liquid period of the day, with significant and rapid moves visible due to high market liquidity. Price movements in the New York session can either align with the trends of the Asian and London sessions or reverse existing trends.
Towards the end of the New York session, liquidity tends to reduce, making it advisable for traders to avoid trading during those times. As the second-largest financial center globally, significant moves are noticeable upon the release of news reports from the US and Canada. Furthermore, the arrival of late news from the UK can affect the markets.
Best Time to Trade Forex in Nigeria
For Nigerian traders, The best time to trade forex in Nigeria is between 8:00 PM and 5:00 PM Nigerian time, as it is during this period that market liquidity is at its peak due to the overlapping of the London and New York sessions.
During this time, there is high liquidity and volatility in the market, which presents more trading opportunities and potential profits. Additionally, important economic events and news releases are typically released during these hours, which can significantly impact currency prices.
This makes it easier for traders to find trading opportunities and capitalize on potential profits.
To determine the optimal forex trading hours, it’s important to consider both one’s trading strategy and the currency pairs being traded.
For instance, those interested in trading JPY may benefit from keeping an eye on the Asian session for potential movements.
By understanding the relationship between the best time to trade forex in Nigeria and forex market sessions, traders can make more informed decisions and improve their chances of success in the market.
What are the risks of trading forex outside of these hours in Nigeria?
Trading forex outside of the recommended hours can lead to lower liquidity and higher spreads, which can result in unfavorable trading conditions. Additionally, trading during low-volume hours can increase the risk of unexpected price movements and slippage.
How can I find out the current trading hours in Nigeria?
You can find out the current trading hours in Nigeria by checking the trading hours of the major forex markets, such as the London, New York, and Tokyo markets. Additionally, many forex brokers provide information on their websites about the trading hours for various currency pairs.
Should I always trade during the recommended hours in Nigeria?
While the recommended trading hours in Nigeria may present the best opportunities for trading forex, it ultimately depends on your individual trading strategy and goals. Some traders may prefer to trade during low-volume hours, while others may find it more advantageous to trade during news releases or other high-impact events.
Can I still make profits trading forex outside of the recommended hours in Nigeria?
Yes, it is possible to make profits trading forex outside of the recommended hours in Nigeria. However, it may require a different trading strategy, as well as a thorough understanding of the market conditions during those hours.
What factors should I consider when determining the best time to trade forex in Nigeria?
When determining the best time to trade forex in Nigeria, you should consider factors such as market volatility, liquidity, and trading volumes. Additionally, you should be aware of any major economic events or news releases that could impact the currency markets.
How can I stay up-to-date on important economic events and news releases in Nigeria?
You can stay up-to-date on important economic events and news releases in Nigeria by using an economic calendar or by subscribing to financial news sources. Many forex brokers also provide regular market analysis and updates to their clients.
Should I consult with a forex expert before trading forex in Nigeria?
It is always recommended to consult with a forex expert or a financial advisor before trading forex in Nigeria or any other market. A forex expert can provide guidance on trading strategies, risk management, and market analysis that can help you make more informed trading decisions.