Forex trading is a highly popular financial instrument that is traded globally. With the forex market being open 24 hours a day, traders can trade forex at any time of the day or night. However, trading forex at night can be a bit different from trading during the day, and traders need to consider several factors before deciding what to trade at night.
In this article, we will discuss what to trade forex at night and how to make the most of the nighttime trading opportunities.
1. Major currency pairs
One of the best options for trading forex at night is to focus on the major currency pairs. These include EUR/USD, USD/JPY, GBP/USD, and USD/CHF. These currency pairs are highly liquid, which means they have high trading volumes and tight bid-ask spreads. This makes them ideal for traders who want to enter and exit positions quickly.
Moreover, these currency pairs are affected by economic data releases and news events from around the world. Therefore, traders can take advantage of the volatile price movements that occur during these events.
2. Asian currency pairs
Another option for trading forex at night is to focus on the Asian currency pairs. These include USD/JPY, AUD/USD, NZD/USD, and USD/CNH. Trading these currency pairs can be profitable since the Asian markets are active during the night, and they tend to be volatile.
For instance, the USD/JPY pair is highly sensitive to the movements in the Japanese stock market. Therefore, traders can use technical analysis to identify the key levels of support and resistance and trade accordingly.
3. Cross-currency pairs
Cross-currency pairs are another option for traders who want to trade forex at night. These currency pairs do not involve the US dollar and include EUR/GBP, EUR/CHF, and GBP/JPY. These currency pairs are less liquid than the major currency pairs, but they can be profitable for traders who have a good understanding of the market.
Traders can use technical analysis to identify the key levels of support and resistance and trade accordingly. Moreover, traders can take advantage of the news events and economic data releases that affect these currency pairs.
4. Commodity currencies
Commodity currencies are another option for traders who want to trade forex at night. These currencies include the Australian dollar, New Zealand dollar, and Canadian dollar. These currencies are highly correlated with commodity prices such as gold, silver, and oil.
Therefore, traders can use technical analysis to identify the key levels of support and resistance and trade accordingly. Moreover, traders can take advantage of the news events and economic data releases that affect these currency pairs.
5. Volatility indices
Finally, traders can also trade volatility indices at night. Volatility indices such as the VIX and VXX are highly volatile and can be profitable for traders who have a good understanding of the market. These indices tend to be active during the US trading hours, but traders can take advantage of price movements during the night.
Traders can use technical analysis to identify the key levels of support and resistance and trade accordingly. Moreover, traders can take advantage of news events and economic data releases that affect the volatility indices.
In conclusion, traders have several options when it comes to trading forex at night. Traders can focus on the major currency pairs, Asian currency pairs, cross-currency pairs, commodity currencies, and volatility indices. Traders need to have a good understanding of the market and use technical analysis to identify the key levels of support and resistance. Moreover, traders need to take advantage of news events and economic data releases that affect the currency pairs and volatility indices.
