Mondays and Fridays in Forex.

[hybrid]

I've read in many places that Mondays and Fridays are not too great for trading.

Can someone elaborate on the reasons why? All i can find is "mondays are bad as start of the week and fridays bad as at the end" - i seek a more tangible explanation......if there is one.

 

[random12345]

I've read in many places that Mondays and Fridays are not too great for trading.

Can someone elaborate on the reasons why? All i can find is "mondays are bad as start of the week and fridays bad as at the end" - i seek a more tangible explanation......if there is one.

The only explanations are that Mondays tend to be involatile (or are perceived to be - the average daily range isn't hugely different) and that Fridays tend to have thin liquidity (meaning quick sudden moves in many conflicting directions are possible and ranging-spiking is considered to be unwanted price behaviour) as entities choose to lighten their risk into the weekend.

For whatever reason some retail 'professionals' choose not to trade these days, though many claim to make money on other days regardless of conditions so it's something of a paradox.

The only real days that are predictably awful for trading are where major jurisdiction holidays cross over - a UK bank holiday and a Federal holiday combined are almost always completely worthless. This Thursday is Thanksgiving and I wouldn't expect any decent move post 2:30pmish London time. European holidays are generally fine so long as London is open.

 

[Jason Rogers]

I've read in many places that Mondays and Fridays are not too great for trading.

The only real days that are predictably awful for trading are where major jurisdiction holidays cross over - a UK bank holiday and a Federal holiday combined are almost always completely worthless. This Thursday is Thanksgiving and I wouldn't expect any decent move post 2:30pmish London time. European holidays are generally fine so long as London is open.

I tend to avoid trading during holidays because the market is thin, and also because I want to enjoy the holidays.

However, I disagree with the statement about Mondays and Fridays being bad for trading. That said, I have found that Fridays leading into a holiday weekend can be slow particularly after 10 AM New York time.

 

[Giovan]

They aren't as bad as people say, but basically Monday's never really pick up till the US open.
Fridays: the markets only move well between 8am and 12PM EST.....
If you aren't good in trading psych, its best to avoid these days as you may end up executing trades even without waiting for credible set ups

 

[NVP]

depends on the TF being traded.... ?

 

[hybrid]

1h and/or 4h.

 

[Jason Rogers]

They aren't as bad as people say, but basically Monday's never really pick up till the US open.
Fridays: the markets only move well between 8am and 12PM EST.....
If you aren't good in trading psych, its best to avoid these days as you may end up executing trades even without waiting for credible set ups

You make a good point about taking into account the time of day, Giovan.

I live in the US, so when I think of trading on Mondays, it's always after the US open.

 

[Liquid validity]

Interesting point.
From what I recall (don't have data to hand atm, cba re-booting) my backtests
did show certain days to be better than others in terms of profit.
I'm pretty certain my backtest did not highlight any day as
a losing day overall, including mon & fri.

The live forwards test sample I do have to hand, 2 years - 855 trades,
does show mon and fri to be the days with the lowest profit.
Although interestingly, monday isn't that bad for me (420 points up, compared to weds best day - 1027 points).
Friday however has so far resulted in a loss of 65 points (meaningless without risk I know).
Wednesday is my best day so far, then tues, thurs, mon and last friday.
Has to be said each day is of low sample size - highest 198 for tues and lowest
157 trades for weds.
Thats just me though, I wouldn't read too much into that at all.

TBH I think it is highly dependent on how and when you trade and regarding friday,
whether or not you avoid NFP or not, and if you do trade NFP, how well you do.
I'm aware my algo probably does not handle NFP very well, but the overall
backtest turns a profit, so it stays for now.
Really I should isolate NFP data by date and test it stand alone to finally
decide whether to switch off or not for NFP.
Thus far it doesn't appear to be as critical as I first thought, which is why I
haven't got round to it yet - manually isolating the NFP days is a PITA
as Ninja would otherwise require a date list of no trade days.
If you've got the date list may as well isolate and test anyway.

At the end of the day, its entirely down to your own results really.