The Forex market operates 24/7, but you still must be aware of the best trading hours regarding which currency pair you want to trade. Often you can have a more profitable trade. That is if you pay attention to how everything moves throughout the day—the GBP is one of the most traded currencies behind the US dollar. Traders usually rely on their strengths and weaknesses that appear every day in real-time when we are talking about GBP/USD investing.
Keep in mind that not all markets trade currency pairs actively. That’s why it is best to trade during a time that is more suitable for a specific currency. This article will discuss the best time to buy or sell the British pound and US dollar pair.
Volatility (Most Active Times of Trade in General)
The Euro and British Pound, including the Swiss Franc, are most actively traded when the London stock market operates.
The US dollar and Canadian dollar are most active when the NYST is open.
Regarding the GBP/USD currency pair, the best hours are when the London and the NY stock market are available and most likely when their times are overlapping.
Acceptable Times to Day Trade GBP/USD (GMT)
The volatility depends on virtually every trading hour. So there is always a higher amount of movement at the beginning (of pips) that starts at 6 AM and lasts until 4 PM (GMT). With every hour passing by, there are fewer options for significant price movements. Thus, you should have a plan ahead of time if you want to trade with this pair.
Trading outside the timeframe we mentioned earlier usually isn’t enough for traders, since they are not big enough. Of course, this could easily change if something happens in the world, in either the economy or politics. The usual volatility is around 78 pips per day, but it can grow up to 100 pips.
It doesn’t matter if the volatility goes up or down – from 6 AM to 4 PM GMT is still the best time for day traders if they are using GBP/USD currency pairs.
What is Cable Trading?
Cable trading is the term used when we mention the London and New York Stock Exchange. More precisely, when the times overlap, since there is a connection between the two during that time, it offers more profitable trading opportunities.
As we said, you should always pay attention to what’s going on economically in Great Britain and the United States, whether it is about equities, futures trades, etc. It can positively impact how the currency reacts to it.
A piece of good advice is to trade when the price is moving faster, meaning a minimum of 15 pips or more.
What is the Ideal Time to Day Trade?
We mentioned the standard time (6 AM to 4 PM GMT), but if you have the time try trading GBP/USD pairs between 8 AM and 10 AM GMT and ideally between 12 PM and 3 PM GMT. The efficiency is far better in terms of commissions costs and the potential of earning extra profit.
You will have the chance to analyze how big the moves are during these time frames. This is because of the aforementioned “Cable Trading.” Two markets overlap, which means spreads will be tightest during that time.
What Can Help you Keep Track of your Trades?
There are many methods and tools that can help you with trading. The Forex market operates all the time and takes the pressure off to focus on the specific times when you are free and create a solid trading plan. It’s useful to have a certified broker that you can check in with from time to time to see how everything is going, and someone to consult if you should change something regarding your trading strategy. If someone is up to date with everything, that should be your broker.
There is also a software that can help you, but it’s advised mostly that beginners use it. So that you can analyze and recognize trading patterns easier. After some time, you won’t need it as much, or maybe at all.
There are also Forex calendars that can show you what’s new on the Forex market if you are trading GBP/USD. This means checking out the news as well.
In the End
Stay informed but don’t put too much stress on yourself. That’s why you have this article. You can find lots of information via your broker and read the news in general. Invest bit by bit and keep learning. Good luck!