Forex is the most active and liquid market in the world right now. The best aspect of the Forex market is its round-the-clock trading. It provides you the flexibility you need to succeed.
Researches have indicated that around $5.3 trillion is traded daily. Therefore, you can assume how much opportunity awaits you.
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Forex is unlike shares that you see on various stock exchanges. Instead, it is an entirely over-the-counter product with no central physical exchange. So, you can participate whenever you want. But the bummer is that not every hour is fruitful in the Forex world. It’s best to trade at the optimal time.
Otherwise, you would be wasting your resources. The market is most active when the trading spreads go narrow. This is when the market makers get less money, and the traders can grab more. And that trader is you. So, your job as a trader is to hit the perfect timing.
Also Read: Is Forex Legit?
- What is the Forex Market Hours?
- What are the 4 Trading Sessions?
- When is the Best Time to Trade Forex?
- Trading in Day and Night
- Most Volatile Currency Pair
- Factors Influencing the Trading Hour
- The Worst Time to Trade Forex
- What About Your Forex Broker?
- Forex Trading Hours on Weekends
What is the Forex Market Hours?
The Forex Market is open 24 hours a day and 5 days per week. Therefore, it gives the traders enormous flexibility.
You may ask, how is this even possible? Well, the continuous trading is feasible as it is traded in decentralized venues. Excluding the weekends, the market is open all over the world. But don’t get excited right away. You might be thinking that the market stays active the entire day. But that is hardly the case. You can make a lot of money when the market is up. But the opposite can also happen.
When the market is down, it’s tough to make money at all. And there will be many times when the market is as still as a statue.
What are the 4 Trading Sessions?
The whole Forex market can be divided into 4 trading sessions. These periods are the peaks of the market.
The sessions are the Sydney session, the Tokyo session, the New York session, and the London session. Each of these sessions has its own opening time.
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The Tokyo Session
Traders often overlook the Tokyo session due to liquidity and volatility. But these traits make it much more attractive than the others.
It is one of the largest Forex centers in the world. About a fifth of the entire transactions occur in this period. The Tokyo session usually opens at midnight during the autumn and winter months. The session closes at 9 AM, UK time.
The London Session
When the Asian trading activity hits close, the London session takes over and keeps the market alive. The London session is quite dense and has several financial markets. The session opens at 8 AM in the UK time zone and closes at 4 PM.
The London session is also one of the largest centers accounting for about 35 percent of Forex transactions. Unlike the Tokyo session, the liquidity is much higher, which results in lower spreads.
The New York Session
When the new York session comes online, the Asian markets already have been shut for several hours. But there isn’t much difference for the European traders. The New York session has the highest volatility and participation among the four. The session opens at 1 AM EST and closes at 5 PM EST.
The Sydney Session
Last but not least is the Sydney center which opens at 3 PM EST and closes at 12 AM EST. This session completes the 24-hour market Forex loop. Sydney and Tokyo have the lowest volatility out of the four sessions.
When is the Best Time to Trade Forex?
As we’ve mentioned before, the best time to trade is when the market is most active. The best Forex market hours are when you will find the narrowest spreads, which will ultimately lead you to execute a good deal.
You already know the four sessions discussed in the previous paragraph of our article. Therefore you have a rudimentary idea of how Forex hours work.
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The Forex world stays the most active when the market hours tend to overlap between this trading session. Your job is to find these hours that are overlapping. This is when the buying and selling skyrockets. You will find the highest volume of trades at that time. The overlapping hours are given below:
- 1 PM to 4 PM (GMT): In this course, both the New York and London’s exchanges remain open.
- 12 AM to 7 PM (GMT): This is when the Tokyo and Sydney sessions collide.
- 8 AM to 9 AM (GMT): The hours when Tokyo and London exchanges stay open.
So, these are three different windows. You may still be asking which one to choose between the three. Well, the window between New York and London is your best bet. This window is the most crucial because over half of total Forex trades run through these two centers. Also, the London and New York session itself has high movement according to data.
Trading in Day and Night
For traders, there is no day and night. It ultimately depends on your strategy and how you live your life. Most people trade Forex as a hobby or a side venture. Therefore, trading in the day and evening is perfect. There are now tons of trading platforms available. You can easily trade with your smartphones or laptops. Also, daylight savings has its advantages.
Most of the enormous economic and political events occur during the day. Therefore, it’s evident that this period will be the most active and volatile in trading Forex.
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If you are a night-owl, there is some good news for you too. Currencies such as Japanese yen or Singapore dollars stay the most active at those times due to the time differences in countries. So make up your mind regarding the exchange market.
Most Volatile Currency Pair
You need to have some knowledge about the volatility of currency pairs if you are looking to trade. Volatility of currency pairs depends on liquidity. When there is high liquidity, there will be low volatility in a currency pair. It shows how much the price fluctuates over time. Volatility is a significant factor as it impacts spreads in the market.
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That’s why it’s essential to know about the currency pairs with the most volatility. AUD/JPY, NZD/JPY, AUD/USD are some of them. You may be asking why I am reading about foreign currency! Well, you need to trade in a time when there is more volatility. More volatility means low liquidity, which leads to lower risks in trading.
Factors Influencing the Trading Hour
We have now known about the best Forex trading hours. But, there will be some exceptions at certain times. Some factors influence the volume rate of the trading market. One of the most significant factors is political or economic news.
If major news comes to light, the trading volume will increase. Millions of traders around the world will start selling and buying. The usual hours won’t work accordingly.
Therefore, you need to look out for such major news. Another crucial factor is the occurrence of a crisis. During an inevitable crisis, the slow trading hours can see a gigantic boost. Also, the release of economic data speeds up the market. Data about jobless figures, trade deficits, and consumer price index can help stabilize the Forex market.
One question can come to your mind. How would someone predict something like this? Well, you can’t. But your intuition should tell you when these sorts of news or data are set for release. Therefore, you prepare yourself to trade according to it.
The Worst Time to Trade Forex
Now that we’ve covered the best trading hours, let’s look at the complete opposite. So, there are times when you should never try to trade Forex. If you do, you will almost certainly suffer a loss. Experts have listed some of the challenging times for Forex. These times include days before, during, and after any major international holiday.
It can be Christmas or New Year. Also, it’s best not to trade in bank holidays, as the trading volumes tend to be below. Apart from these times, there are some other hours when you should not trade.
The Witching Hour
As you already know, the best time is when two sessions overlap. And the worst is when the time is odd for all sessions. There are two hours between the New York close and the start of Tokyo, which is an absolute nightmare for traders.
Statistics show that the trading volumes fall to 2 percent of peak turnover at that time. During this time, crashes happen, and spreads get very high. The trading volume decreases as a result.
Imagine you are holding a position open in Forex. You are going about your day thinking nothing is going to happen. But suddenly, you see there is a charge to your account. How would you feel? This kind of incident happens to many beginner traders.
It happens because of a term called rollover. So, if you hold your position on a weekday night, your broker will charge you. So, make sure you don’t trade at that time.
What About Your Forex Broker?
Now in this modern world, Forex trading has become a lot easier. If you choose a broker, they will provide a platform where you can trade. This trading platform will function on the time frame of the country of the broker. Now, here is the crucial part.
When you choose the market hours, you need to ignore the local time of the platform. Instead, use the universal clock (EST/EDT). It will be suitable for all investors around the clock.
Forex Trading Hours on Weekends
Typically, you can’t trade on the weekends. The Forex trading market stays open 24 hours a day except on the weekends. But there are some catches.
The Forex market doesn’t stay close for everyone. It’s usually just closed for the traders. But it is open for central banks and other related institutions. They keep on pushing even on the weekends. So, this is where the catch is. On the weekends, there will always be an enormous transaction that will take place.
This transaction creates a phenomenon called the weekend gap. This gap can cause your position to close and triggers your stop-losses. It’s the reason many traders choose to set wider stops or close their positions.
Also, many brokers give you access to trade even on the weekend, like Sunday. But there will be some complications. The spreads will be super high even when the liquidity is thin. So, you have to compromise your spreads to trade on Sunday.
Forex exchange is the choice of several traders worldwide because of convenient market hours and high liquidity.
Also, it can trade on margin. Like any other investment, in Forex, you can profit or lose money. If you want to make profits, then you need to know about Forex trading hours. Trading in the proper Forex market hours can reduce the risks and increase your chances of succeeding.
Also Read: Forex Trading Strategies
Which Forex markets are open right now?
It depends on where you are right now. The Tokyo center stays open from 9:00 AM to 6:00 PM. The London session stays open from 8:00 AM to 5:00 PM. The New York center remains open from 8:00 AM to 5:00 PM. Depending on your location, there can be any of the centers open right now.
How many hours do you need to make money from Forex?
You will make money depending on the proportions of trades you win and how significant your profit is. If you manage to trade two hours in Forex, you can make 100 trades by the end of the month.
Is Forex Trading allowed in the US?
Yes, Forex trading is allowed in the US and many other countries