A look at how high and low volatility affects day trading in the EURUSD, how to determine current volatility, and how current volatility compares to historic averages. The article looks at overall volatility, volatility by hours of the day, and volatility by day of the week.
Current overall EURUSD day trading conditions: “It’s a great time to be a EURUSD day trader”
The 10-week average for daily movement (high minus low) in the EURUSD is right around 100 pips. That’s the average daily range for the most heavily traded currency pair in the world.
Over the last 5 years, the daily average range has spent most of its time above 70 pips, and has even spent some time above 100 pips. But 100 pips or greater of daily movement in the EURUSD is actually pretty rare and usually doesn’t last that long.
When average daily movement is above 50 pips I find there is ample profit opportunity for day trading most days. As volatility drops off, sometimes the opportunities do as well. In late 2019 and early 2020—when average daily volatility was down near 45 pips per day (24-hour period)— I was getting more emails from frustrated traders. They were no longer seeing strong trending moves during the day, something they had capitalized on when volatility was higher. With smaller price moves, spreads and commissions cut more deeply into profits.
In August, September, and October of 2021, volatility also dropped off, this time averaging about 50 pips per day. During this time I saw some drop-off in overall profitability compared to the months with more movement. Even with the lower movement, profits for the EURUSD Day Trading Course strategies remained robust and well in profitable territory.
Our daily profit isn’t perfectly correlated to the EURUSD’s daily average movement. Sometimes we can make a killing in low movement, and sometimes trading in volatile conditions can be hard. It depends on how many valid trade setups we get each day, week, and month. But as a general guide, I tend to find more trading opportunities when the price is moving more compared to moving less.
Right now is a great time to be a EURUSD day trader. There is ample movement and plenty of trade setups most days.
EURUSD Volatility by Day of the Week and Hour of Day
Here is the EURUSD movement by hour of the day. This chart is in Eastern Standard Time (EST). Adjust to your own time zone accordingly. The chart shows how many pips the pair moves on average each hour.
The hours with the most movement are 0200 to 1600 EST. For traders in the US and Canada, the prime day trading spot is between 0700 and 1100 EST. After 1100 the action tends to drop off, but there are still opportunities up till about 1500 ot 1600.
Because of the high overall volatility, this is a pretty large trading window. Often volatility drops off by 1100 and tends to stay lower until 0200 the next morning when overall movement is lower.
I am based in mountain time (2 hours back of EST), and I trade between 6 am and 8 am (8 to 10 EST). This is a great time of day to trade. If that doesn’t work, any time between 0200 and 1500 EST is a possibility.
EURUSD Average Movement By Day of Week
The day of the week sometimes matters. During some stretches, certain days of the week tend to be much quieter/more active than others. Therefore, it is worthwhile to check the stats periodically.
Right now, all days are offering opportunities, although Thursday tends to have more movement than the other days.
Here is the data over the past 10 weeks.
- Monday has averaged 80 pips of movement
- Tuesday: 84
- Wednesday: 105
- Thursday: 140
- Friday: 82
As mentioned, right now is a great time to be a EURUSD day trader. And it almost always is! There have been only a few months in the last five years where movement got really low. And even then, with being selective on trades there was still plenty of profit potential.
By Cory Mitchell, CMT
For strategies, and an entire method of day trading the EURUSD, check out my EURUSD Day Trading Course. It outlines what you need to get started, tradable patterns that occur nearly every day, and how to improve along the way.
Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.