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.
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 67 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.
When average daily movement is above 50 pips I find there is typically ample opportunity for day trading. As volatility drops off, 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 a lot of 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 and/or resulted in more losses.
In August, September, and October of 2021, volatility also dropped off, this time averaging about 50 pips per day. During this time there was some drop-off in overall profitability compared to the months with more movement, but profits for the EURUSD Day Trading Strategies remained robust and well in profitable territory.
Below is a list of how the day trading strategies performed throughout 2021. Near the start of the year, overall profits for the month tended to be higher, but decreased as movement in the EURUSD decreased. This makes sense. It should also be noted that I went from trading 2 hours per day to trading 1.5 hours per day near the middle of the year. That also reduced the profit potential each day because less time trading typically equates to fewer trades and less profit.
- January: +63R potential (“R” in trading is a risk unit. For example, if you risk 1% per trade, +63R means you made 63% for the month)
- February: +78R potential
- March: +76R potential
- April: +76R potential
- May: +94R potential
- June: +91R potential
- July: +67R potential
- August: +38R potential (we can see the drop in volatility affecting the number of trades and thus the profit potential)
- September: +51R potential.
- October: +46R potential.
- November: 48R potential.
See how to trade like this in the EURUSD Day Trading Course.
Our daily profit isn’t perfectly correlated to EURUSD 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 opportunities when 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.
Next, let’s look at some additional volatility statistics for the EURUSD.
EURUSD Volatility by Day of the Week and Hour of Day
Here is 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 1100 EST. For traders in the US and Canada, the prime day trading spot is between 0700 and 1200 EST. After 1200 the action tends to drop off considerably and stays fairly quiet until 0200 the following night when Germany opens up followed by London.
Don’t be tricked by that little spike at 1400 and 1500. That is when the US is closing, so spreads tend to widen and there can be price gaps. I wouldn’t recommend holding day trades through this period unless you have a specific strategy designed for the US forex close (this article discusses that period of the day).
I am based in mountain time (2 hours back of EST), and I trade 630 am till about 8 am (830 to 10 EST). This is a great time of day to trade. If that doesn’t work, any time between 0200 and 1100 EST is good.
EURUSD Average Movement By Day of Week
The day of the week sometimes matters, but recently not so much. During some stretches, certain days of the week tend to be much quieter than others. Therefore, it is worthwhile to check the stats periodically.
Over my 17 years for trading (12 in forex), there have many months and even years where I wouldn’t even open my trading platform on certain days of the week (and certain days of the year). At these times there was a strong tendency for a certain day to be really quiet and offer little profit opportunity for my strategies.
Right now, all days are offering opportunities.
Here is the data over the past 10 weeks.
- Monday has averaged 59 pips of movement
- Tuesday: 62
- Wednesday: 70
- Thursday: 63
- Friday: 81
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.
Hopefully the good trading continues into the New Year. The last year has been great for day trading with ample movement.
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.