When trading currencies, we want to see some movement in the currency that is traded. It gets pretty frustrating when there is no movement to capitalize on. The greatest volatility that occurs will be when there is some major economic news that is released. These news events occur every week. Some news has greater impact than others or will affect only certain currencies.
Barring any major news, there are times that are more volatile than others. Typically, the most volatile time will be at the beginning of the new week. When the market closes on Friday, there is the whole weekend when trading is halted. Life and news continues on however. When the market reopens, the prices need to adjust based on the weekend’s events.
Since the bulk of trading is done by the major banks, the most trading will be when some of the major areas of the world start trading. Frankfurt is the first area for major banks to open. London follows which is the heart of currency trading, and when the most activity occurs. When they start trading, particularly the first day of the week, is when greater volatility will occur. The Euro, Pound, and Swiss Franc are the most impacted. When New York wakes up, you will see another volatile period of time. Any trade of the US Dollar will have greater volatility at this time.
When US banks are closed, there will typically be a dead time during the day until Sydney and Tokyo open up. The Yen, Aussie, and Kiwi will be the most impacted by these openings.
When there is an overlap in trading among the major areas of the world will also bring some greater volatility. The overlap of London and New York will be the greatest volatility. Tokyo and London will also have an overlap. As the week approaches the close, you tend to have less movement, particularly on Friday. The middle of the week tends to have some greater movement.
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