What are forex market hours
You may have heard that the forex market is open 24 hours. However, that is limited information. And if you want to become a professional forex trader, then there is much more you need to know about the forex market hours.
In this blog, we will conduct an in-depth study of forex market timings, sessions, and the best time to trade. It will help you determine hidden market aspects and plan your trade accordingly.
What are forex market hours?
Forex market hours are the time between the opening and closing of the foreign exchange market. During this period, traders can buy or sell currencies and earn profit.
You may have seen the stock market open and close for a few hours in a day. The market timings are generally based on geographical locations and exchanges.
However, forex is a global decentralized market. One can trade in currency 24 hours and 5 days a week except on weekends. But one thing to note here is not all sessions are open for 24 hours.
Forex market has four sessions: Tokyo, Sydney, Europe, and London. Each session has a different opening and closing time in the day.
Forex is regarded as a 24-hour market, as at least one of these sessions remains open for trading throughout the day. Traders can trade in any of these sessions, irrespective of their geographical locations.
Forex Market Opening and Closing Time
A Forex market week starts from Sydney, Australia, at 10:00 pm GMT on Sunday and ends in New York, USA, session at 10:00 pm GMT on Friday.
However, forex market sessions’ daily opening and closing times are different. So here is a table with different forex sessions and their timings:
A quick glance
The Forex market has four sessions: Tokyo, Sydney, Europe, and London. Each session has a different opening and closing time each day.
Forex is regarded as a 24-hour market, as at least one of the four sessions remains open for trading anytime during the day.
Tokyo Session: 11 pm to 8 am GMT
Sydney Session: 10 pm to 5 am GMT
London/Europeon Sesion: 7 am to 4 pm GMT
New York/ US Session: 12 Noon to 8 pm GMT
The US and European session Overlap is considered the best time to trade in the forex market. It occurs between 8 am and 12 Noon UTC.
Sydney Session:
The forex market starts with the Sydney session. Sydney sessions have low liquidity and volatility, as well as low trading volume. However, it offers great market conditions for trading Australian and New Zealand dollar pairs.
Tokyo Session:
The Sydney and Tokyo sessions are called the Asian Session together. The Tokyo session observes data releases and economic calendar events from Japan, Russia, China, Australia, and New Zealand.
These activities cause significant price fluctuations in Asian Currencies. Therefore, the forex session is suitable for trading JPY, AUD, NZD, CNY, and RUB.
London Session:
London is the key center for financial activities, and the EURO is the second strongest currency. Also, the United Kingdom has a good influence on the entire world.
As a result, the European session offers great market conditions for forex trading. Major data from the United Kingdom and other big European nations resulted from these forex market hours.
According to a data, 30% of forex transactions occur during Europeon session. So that forex traders can experience excellent liquidity, volatility, and volume during this session.
The European Session is suitable for trading numerous currencies. You can trade majors, minors, and even exotic pairs during this time. However, the session is the best for trading GBP/USD, EUR/USD, EUR/GBP, and EUR/JPY pairs.
New York/ US Session:
The US dominates the world, and USD dominates the global financial market. The US dollar is the strongest currency in the forex market. According to data, around 88% of traders trade in US Dollars.
So, naturally, forex market liquidity is at its peak during this session. Also, this session saw the release of US economic data, such as core CPI, PPI, employment, NFP, crude oil inventories, the Fed interest rate decision, the FOMC, and many others.
The big data releases provide key insights for currency trading, especially for major forex pairs. Therefore, the session is the best for trading pairs like USD/JPY, USD/CAD, EURO/USD, GBP/USD, AUD/USD, NZD/USD, USD/CHF, etc.
Best Forex Market Hours to trade
The Forex market is open for 24 hours to trade. However, that does not mean you should trade 24 hours. Forex market time can significantly impact your overall profit or loss.
Therefore, the knowledge of the right time to trade is a must. Here are the market hours that are best to trade in:
Overlapping Hours:
Forex overlapping occurs when two sessions remain open at the same time. Overlapping offers great market conditions as it combines traders from two sessions. As a result, liquidity and volume increase.
Forex overlaps take place three times a day. The timing of the US and European Session overlap is considered best, while Sydney and Tokyo overlap for trading Asian pairs.
US and European Session Overlap: 8 am to Noon UTC
Sydney and Tokyo Session Overlap: 2 am to 4 am UTC
London and Tokyo Session Overlap: 3 am to 4 am UTC
Based on Currency Pairs:
The best time to trade forex depends on the type of currency pair. The overlapping time of European and United States sessions offers great market conditions. However, for a person trading in AUD/JPY, it is not the right time to trade.
A trader should consider the currency pair to decide the right trade time. For Asian pairs, the overlapping time of Sydney and Tokyo is good; for USD pairs, one can trade in New York & London overlaps; for minor pairs, the European session is good.
High Liquidity Hours:
The reason why London and Europeon overlapping hours considered best to trade is high liquidity. High liquidity means significant price movement, good trade volume and many opportunities.
In the forex market, high liquidity indicates a large number of buyers and sellers. As a result, one can easily enter and exit a trade during such hours. However, liquidity hours differ from pair to pair. So, a thorough analysis is conducted to determine a particular pair’s liquidity hours.
Wrapping Up
The Forex Market Hours has the power to change the entire trade outcome. Placing trade without considering the time frame is the biggest mistake one can make.
Changes in time frame result in changes in volume, liquidity, volatility, and market risk. Even the currency pair choice changes with change in time.
So, intelligent traders always give importance to forex market timings. Remember, forex trading is all about identifying the right opportunities at the right time. Therefore, give importance to time frames for a smooth trading journey.