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 106 pips. That’s the average daily range for the most heavily traded currency pair in the world. The 5-week average is 87, and the 3-week average is 78 pips. This shows that volatility/movement is dropping.
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 110 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, there’s 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.
Since late 2021, the daily average movement has been on the rise and is near its highest levels in the last five years. As of late 2022, it is starting to drop again.
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. See recent charts and trades here.
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 above hourly pattern is actually quite rare. I actually don’t recall seeing this in the last decade. But it’s great for traders who trade in the European session as strong movement is spread out throughout most of the time Europe and the US are open.
Movement really picks up around 2 am EST when Germany opens. This further escalates at 3 am to 4 am for the first hour London is open. Movement declines for the next few hours and then increases again at 8 am EST when New York opens. Movement remains the highest for the next couple hours and then tapers after 11 am EST.
Anytime between 2 am EST and about 3 pm EST is a great time to trade.
Below is the more typical configuration we see, with the early US session having the highest volatility of the day. I have kept this chart to show how days have historically played out. The chart below is from October 2022.
The hours with the most movement are 0200 up to 1500 EST. This large window is the ideal time for day trading (based strategies I discuss on this site). After 1500 the action tends to drop off.
I’m 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.
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, there is a fair bit of difference between the days of the week in terms of volatility.
Monday tends to have significantly less volatility than the other days of the week. Tuesday and Thursday tend to have the highest movement.
Here is the data over the past 5 weeks.
- Monday has averaged 69 pips of movement
- Tuesday: 103
- Wednesday: 89
- Thursday: 106
- Friday: 80
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 the movement got really low. And even then, with being selective on trades there was still plenty of profit potential.
The Forex Trading Sessions
The forex trading sessions, and which session we are in, has a big impact on EURUSD volatility and price movement.
The forex market is open 24 hours a day, from 5 pm EST on Sunday, to 5 pm EST on Friday. 24-hour trading is possible because there are always countries open for business at all times throughout the day.
On Sunday evening, Asia and Australia open for business, then the European markets open, then the North and South American markets open. Throughout the 24-hour period, there is always a major financial center open. To name a few: Sydney, Tokyo, London, New York/Toronto. When you go to trade, no matter what time of day it is, someone is willing to transact with you, because banks, brokers, and businesses are open for business somewhere.
While there are many countries and cities open for business at any given time, many traders refer to the London, New York, Sydney, and Tokyo sessions because they are major financial centers that all link up to form a continuous 24-hour trading day.
Forex sessions in EST.
How the EURUSD Moves During the Different Sessions
As a general guideline, the EURUSD tends to move the most during the London and New York sessions. This is because all of Europe is trading and all of North and South America are trading at the same time. The “overlap” period between London and New York tends to see the most price action.
Mataf.net provides excellent tools for seeing how much pairs move at different times of the day. Using the charts above, you can see the hours London and US are open and then see the hourly volatility associated with those hours.
The chart below shows how days typically play out, and how movement increases and decreases at certain times of the day.
Oct. 2022 – Represents how movement is typically structured throughout the day
The US session is associated with the New York open, even though most of the country is open for business 1 to 3 hours prior.
While the number of pips a currency moves in a day will change over time, the highest and lowest points tend to stay the same. For example, we can see that the activity in the EURUSD picks up at 0200 when Germany opens, and especially at 0300 when London opens. After that, movement tends to remain elevated till about 1200, and sees a spike near 0800 when the US opens.
Price movement tends to be highest when London and New York are both open, from 0800 to 1200. I enjoy trading around this time. But really any time between about 2 AM and 3 PM EST is good for day trading the EURUSD…that’s a big window.
Right now, volatility tends to be highest near the London open, which is a bit of an anomaly, historically speaking. Usually the US open sees the highest movement.
Daily movement by hour, with NY and London open and close times, as of Jan 4, 2023.
Then action tapers off heading into the US close and then usually stays pretty quiet until London is about to open again. The quietest time to day trade is 3 pm to 2 pm EST.
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.