Best Time to Trade Forex.
With different time zones and markets open overnight, knowing when to trade forex is complicated. Learn about the key considerations here.
Tim Fries.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University .
Reviewed by.
Shane Neagle.
Shane Neagle.
Meet Shane. Shane first starting working with The Tokenist in September of 2022 — and has happily stuck around ever since. Originally from Maine, .
Updated January 09, 2022.
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When the Forex market is open 24 hours, it can be difficult to gauge the best times to trade, right? Is it near the end of a trading session? Will overlapping markets help or hinder your situation?
First time forex traders often get caught up in the thrill of trading 24 hours a day five days a week—after all, logically, the more time you have to trade, the more opportunity there is to experience success. And with COVID-19 re-energizing the Forex market, and key data points signalling the strengthening of the U.S. dollar (as well as other safe-haven currencies) in the long run, there is more reason than ever to be excited.
But short-term emotional gauges should be avoided like the plague. Certain market sessions should be front and center on your economic calendar. Several markets overlap but which ones should you look out for? And with big news releases stirring the potential for instant changes in the currency market, how can you narrow down your watch list to focus on the most important ones?
In this guide, we will outline exactly which sessions offer the most potential for profit, why market timing is important, and several key factors you should consider when planning your trading calendar.
Overview & Summary.
The forex market is a 24-hour market made up of a combination of the different time zones across four parts of the world. The overlapping of the U.S./London session (from 8:00am to noon EST) has the heaviest volume of trading and therefore offers the best trading opportunities. The overlapping of the Sydney/Tokyo markets (from 2:00am to 4:00am EST) is less volatile than the U.S./London overlap, but is another good opportunity to trade, nonetheless. Big news releases can have a significant and instant impact on the currency market.
What are the Largest Foreign Exchange Hubs?
The biggest foreign exchange forex across the globe are New York, Tokyo, London, and Sydney, which results in the markets being open 24 hours a day. The foreign exchange market is an OTC or over-the-counter market – it functions without a centralized exchange. Instead, the forex market exists through a global web of brokers, market makers, and banks.
Optimal Timing for Trading Forex ⏰
Currency trading has a unique element to it because of the hours it operates. The week starts on Sunday at 5:00 pm EST and closes on Friday at 5:00 pm EST.
Though, not all hours of the day are equal. Some are demonstrably better than others. The first thing to point out is that the best time to trade is when the market is at its most active.
When two or more markets are open at the same time, it creates a heightened trading atmosphere. This makes for a more volatile market, causing currency pairs to fluctuate significantly. Volatile markets mean increased risk— and in this case, utilizing a top forex broker will make all the difference to your success.
On the other hand, when just a single market is open, the currency pairs are more likely to only move by around 30 pips. When two markets open together currency pairs can quickly slide by around 70 pips, particularly when major news is announced, which we’ll discuss later on in the article.
Is Forex Trading Open 24 Hours a Day?
The foreign exchange market is open 24/5, opening on Sunday at 5:00 pm EST until 4:00 pm EST on Friday. Forex can be traded over a 24-hour period, mainly because of the world’s different time zones.
Naturally, the best trading opportunity could happen at any time. You may not always have access to a computer when this happens, which emphasizes the importance of a reliable forex trading app in your toolkit.
Forex Market Hours ⏳
So, when are the best times to trade forex? During the daytime, there are several trading sessions. The first session to open is the Asia-Pacific market, this is followed by the U.K. market, and lastly, the North American market.
To begin, we have outlined each individual trading session.
Open & Close Local Time Open & Close in EST Sydney session: 7:00am - 4:00pm 3:00pm to 12:00am Tokyo session: 9:00am - 6:00pm 7:00pm to 4:00pm London session: 8:00am - 4:00pm 3:00am to 11:00pm New York session: 8:00am - 5:00pm 8:00am to 5:00pm.
Tip: Remember that forex trading hours can vary in March, April, October and November, as countries shift to and from daylight savings or summer times on different days.
Can I Trade Forex at Night? ��
Yes, you can certainly trade forex at night in the country you are based in. The market does tend to be less active at night though. Popular forex pairs such as the EUR/USD for example, are subject to less volatility because of reduced liquidity.
Why is Timing Important in Forex Trading?
Understanding the individual trading times for each forex market matters – it might be a 24-hour market, but it is still noticeably more energetic during certain periods, especially when market crossovers occur, which can cause tighter spreads—as we’ll see in a bit.
However, the rise in activity is generally limited to pairs that cover the market locations that are crossing over. For example, the EUR/USD currency pair is subject to greater fluctuations when the U.S. and European sessions are both coexisting during the hours of 8:00 am and 11:00 am (EST).
���� Helpful tip: If you’re an American who is on the lookout for a forex broker, make sure you’re familiar with all U.S. forex regulations. In the U.S. market, forex regulation is of utmost importance.
Every session starts when institutional investors start working, and this coincides with the publication of the most important economic metrics and news. Later, we’ll see what exactly happens when these institutions go to work. For now, we are going to get into the four key forex markets, and when the optimal periods for trading are.
Forex Trading Hours in the U.S. ����
New York opens from 8:00 am to 5:00 pm EST and is the second biggest forex platform in the world. This market is looked at closely by foreign investors because the U.S. dollar plays a role in 90% of all trades, according to Kathy Lien in her book Day Trading the Currency Markets.
Currency fluctuations in the NYSE can have a direct, immediate, and remarkable impact on the dollar. When acquisitions are completed, or companies merge, the dollar can drop or rise in value in an instant.
With this market, trading from 8:00 am to noon EST is most favorable because it overlaps with the London exchanges. Both of these trading centers together account for 50%—half—of all forex trades that take place.
When the U.S. and London forex markets overlap, activity can quickly resemble that of Grand Central Station.
The New York session (from 8:00 am to 5:00 pm EST) has the longest overlap with the London session, so the GBP/USD currency pair regularly experiences high liquidity.
New York’s session is the last trading session to close in the global market and usually goes through high trading volumes, as traders try to grasp hold of their last opportunity to earn profit outside of the news announcements for the trading session.
In most cases, USD crosses experience the most significant volume while the New York session is in play, and they account for a huge chunk of overall activity – USD crosses make up 44.15% of all volume. To take advantage of these fluctuations, consider the top forex brokers in the U.S. market.
Best Time to Trade Forex in the U.S. ��
In reality, there is no ‘perfect time to trade, but the window with the highest trading volume (i.e. increased liquidity) is from 8:00 am to noon EST. This typically offers the best trading opportunities.
The following table lists several common currency pairs, as well as the average movement in pips per day over a 12-month period.
Forex pair Average movement in pips per day EUR/USD 46 EUR/JPY 50 EUR/GBP 44 EUR/CHF 33 GBP/JPY 81 GBP/USD 71 NZD/USD 32 USD/CAD 58 USD/CHF 41 USD/JPY 43 Average overall pip movement 50.
U.K. Forex Market Hours ����
The London Forex Market opens at 3:00 am to noon: The U.K. Forex market dominates the worldwide financial currency market, and London is the key component to this. In fact, London accounts for about 43% of global trading, according to a BIS report. Further, in 2022 the London forex market extended its lead with daily forex trading hitting a record $6.6 trillion.
London also plays a significant role in currency fluctuations because Britain’s central bank, the Bank of England (BOE), sets interest rates and controls the monetary policy of the GBP. It is important for forex traders to stay on top of the BOE’s changes because it not only impacts the Sterling Pound (GBP), but other currency pairs too, like the EUR which is closely linked to the Pound.
Interestingly, forex trends tend to originate in London, which is important for technical traders to bear in mind. Technical traders utilize analysis tools to identify opportunities using statistical trends, price movement, and momentum. The leading forex brokers in the U.K. offer technical traders the tools needed to identify these opportunities and create an effective strategy – some better than others.
The most-traded forex pairs in the London session include GBP/USD and EUR/GBP. This is most apparent once the New York and London sessions overlap – and seeing as how the European session has almost identical opening times as London’s does, this is all the more pronounced.
Historically, the London-Tokyo crossover doesn’t experience as much volume as the aforementioned overlap, simply due to the fact that the markets crossover for a shorter amount of time.
Best Time to Trade Forex in the U.K. ��
While there is no absolute best time trade forex in the U.K., the New York/London overlap offers a four-hour trading window from 1:00 pm to 5:00 pm EST. During this time, the highest trading volume occurs, which creates an opportunistic setting for trading.
We have outlined some common currency pairs and their average price movements in pips in a London session over a year, beginning November 2022, down below.
Forex pair Average daily price movement in pips EURUSD 46 EURJPY 54 EURGBP 50 EURCHF 37 GBPJPY 93 GBPUSD 79 NZDUSD 31 USDCAD 54 USDCHF 42 USDJPY 40 Average pip movement 53.
Forex Market Timing in Japan ����
The Tokyo japan market opens from 9:00 am to 6:00 pm local time, and is the first Asian trading center to open, taking the biggest volume of trades, and leading just ahead of Singapore and Hong Kong. One thing to note is that Japan is the third-largest trading center in the world.
Tokyo’s trading session has a big crossover with Sydney’s session – a five-hour crossover from 7:00 pm to 12:00 pm (EST). During the Tokyo session, the USD/JPY and the EUR/JPY currency pairs are popular.
What’s the Most Common Currency Pair in Forex? ��
The JPY/AUD pair is highly liquid during the overlap of the Sydney and Tokyo sessions. In fact, this pair exhibits the highest volatility, along with being the second most commonly traded currency pair that includes the Yen after USD/JPY.
Best Time to Trade Forex in Japan ��
To conclude, the most opportunistic time to trade the USD/JPY is usually from 12:00 pm to 3:00 pm GMT when the market volume reaches its highest level. During this window, the New York and London markets overlap, creating high activity levels, despite the fact that the Tokyo market isn’t open for the day.
Below we have outlined some popular currency pairs for the average daily price movement in pips on the Tokyo market, for 12 months, from November 2022 to November 2022.
Forex pair Average daily price movement in pips EUR/USD 30 EUR/JPY 46 EUR/GBP 32 EUR/CHF 27 GBP/JPY 69 GBP/USD 52 NZD/USD 31 USD/CAD 30 USD/CHF 28 USD/JPY 34 Average overall pip movement 38.
Forex Trading Hours in Australia ����
Now for Sydney, Australia’s forex market. This opens up Monday morning at 8:00am, local time in Sydney, and closes at 5:00pm, which is really when all the forex fun begins.
Though it is the smallest of the major markets, it accounts for plenty of the action when markets reopen on Sunday afternoon, because traders and financial institutions are beginning to regroup after the weekend break.
To really take advantage of the Australian forex market, consider using one of the leading Australian forex brokers. Choosing the right broker will depend on several factors including your trading style, your trading level, and your budget.
How Time Zones and the Time of Day Affects Currency Pairs ⏲️.
Certain currency pairs are affected by crossovers more significantly than other pairs are. Let’s look at a concrete example – the GBP/USD and USD/EUR currency pair experience higher volumes when New York begins finding its groove – usually, at the same time, London is in the middle of a full-blown breakout.
Generally speaking, and as we mentioned earlier, a currency is more liquid when one or more of the markets associated with it has an open session. For example, the USD/JPY is most liquid when either or both the US and Asian market is open, and equally, it is less liquid during the European session.
Time zones and trading hour windows have a massive impact on many currency pairs.
Despite a pair being more liquid or popular, or even exotic, you ought to have an understanding of the financial data that will be published about it, and the sessions that are more likely to experience volatility.
Once you have this information, you can decide whether you want to trade during or outside of these volatile periods – both bring with them their own pros and cons.
Just like with other markets, there isn’t an “ideal” period for trading forex. Of course, there are some times that are more full of opportunities. More specifically, there will be times when a certain currency pair or trading style is more advantageous than others.
The more experience you acquire, the easier it will be to narrow down the best trading window for you.
To get started, you will need to find a leading forex broker, one that complements your trading needs and goals. Keep in mind, Forex trading comes with high stakes and even higher risk. For this reason, it’s important to be able to differentiate between the scams and the brokers that will give you the best chance of earning a profit.
Forex Trading in Different Times.
Before you get into trading, keep in mind that the level of liquidity that you’ll come across also depends on the exact time of the day you trade, and on whether that time coincides with an overlap between two different market sessions.
The countries that host the exchanges that have overlapping sessions will have an effect on liquidity too. For example, the overlap between London and New York sees much more liquidity than the overlap between London and Tokyo does. This is also true for the volatility that different markets experience. The overlap between London and New York sees the most volatility, on average.
This is a positive or a negative depending on how much volatility you’re after. Most importantly, you should have a solid risk management forex trading strategy when trading in different forex markets.
Forex Trading During Time Zone Overlaps ��
As you may now have realized, the most opportune time to trade is when different markets overlap in their opening times. Why so? Market overlaps lead to larger price ranges. Higher price ranges mean more opportunity. Let’s look at each of the market overlaps that occur daily.
New York/London (8:00am to noon EST): The U.S. and London market overlap is the heaviest within all the markets. When these markets are open, the majority of trades happen – 70% of trades, actually. Why? Because this overlap covers the Euro and the US Dollar – and these are the most widely-used and traded currencies in the world. As such, when the sessions that cover them overlap, there are a lot of good opportunities to trade. Australia/Japan (2:00 am to 4:00 am EST): The overlap between Sydney and Tokyo doesn’t exhibit as much volatility as the US/Great Britain overlap, but nevertheless, it offers a trading environment with decent price fluctuations. Trading the Euro/Yen pair is ideal during this overlap. London/Japan (3:00 am to 4:00 am EST): This London and Tokyo market overlap is the least active session overlap. This is due to time zones (a majority of U.S. traders fast asleep during), and the overlap only lasts for a single hour – this doesn’t give much opportunity for bigger pip fluctuations to happen.
What Happens When Institutions Go to Work? ��
When institutions go to work, you will find announcements from relevant press releases and monetary policy makers, usually being released in the morning. This is also when institutional traders are at their most energetic, because it is the best time of the day to trade forex. The additional activity then contributes towards the heightened volatility levels.
Forex markets are often most active shortly after institutions open their doors and start working.
The currency relevance will need to be considered too. When the sun rises in London and the subsequent working day starts, the Bank of England releases financial news, and companies working in GBP will hedge orders so they can protect the Pound Sterling based on overseas purchases.
It’s clear then that it will be the British banks and funds speculating on the market. Individual traders in the U.K. are the most active during the day because of this, but they will play a relatively unimportant role on monetary changes.
Why? Well, because the volume produced, in comparison, is rather small, quite frankly .
This is the case with other countries and currencies too. So, if you’re looking to trade in volatile markets, take account of when the bigger (more impactful) movers are active.
Something else to keep in mind: most of the volume in the forex market is produced from the Forex spot market, which is, mostly, where retail traders trade.
While it is true that the spot market is open 24/5, the futures market is linked to physical exchange centers. More specifically, it is tied to the Chicago Mercantile Exchange and a web of others throughout the U.S. and abroad.
This is important for you to be aware of because it reinforces the idea that when it comes to the futures market, pairs can be traded against the US Dollar only.
When is the Best Time of Day to Buy or Sell Forex? ��
Overall, the best time of the day to buy or sell forex is when the U.S. and London markets crossover at 8:00am to 12:00pm EST. This is when the heaviest trading volume takes place, giving traders the best opportunities for trading.
High-Volume Trading Hours Don’t Always Mean Profits ⚠️.
With all of that said, trading hours aren’t always the key to profit. Forex traders should tread lightly in this sense because trades usually involve high stakes – sometimes leverage rates can be as high as 1000 to 1.
While a ratio of this size offers tantalizing profit opportunities, it brings with it the risk of significant loss in a single trade. A study on uninformative feedback and risk taking shows evidence that a significant number of traders “attribute random success to their own skill and as a consequence, increase risk-taking…Although past performance is not an indicator of future success, traders increase trade sizes, trade variability, and a number of trades with gains, and less with loss.
The study goes on to show that there is a large discontinuity in these trading variables around zero past week returns. In other words, traders tend to dramatically increase their trade size after they’ve achieved a couple more wins than losses. The effects of this weigh heavier on beginner traders, consistent with higher learning curves at the beginning of trading.
This insight is important for novice traders considering forex trading to understand. The implications are clear: a trading strategy will increase consistency, reduce human errors (through emotional trading or a lack of judgement) and boost your chances of taking a profitable market position.
All-in-all, once you prepare appropriately, understand the basics, and open an account with a quality forex broker, you will be on the right track. To start, you should find a broker that has a demo account. This will allow you to get an impression of the platform and the current trading environment.
Impact of News Releases on Forex Markets.
Without a doubt, understanding the forex markets and how they overlap will help you arrange and optimize your schedule. To yield the absolute best results, there is another, equally important, factor to consider: news releases.
We spoke about news releases potentially having a powerful effect on a trading session briefly earlier. When an important statement is released relating to economic data – especially if it contradicts the predictions – currency can rise or fall in value in the blink of an eye.
News alerts can have a significant impact on the forex market (image courtesy of CNBC).
Although a lot of news is released about the economy every day in all the time zones, which affects every currency, it’s unnecessary and unhelpful to try and take all of this into your scope. What is needed?
It is essential that you learn to focus and narrow your view on the news releases that are relevant to you, as opposed to those that will just serve as distractions.
Generally speaking, the more an economy grows, the more favorably it is viewed by investors from all around the globe. With that, investment capital flocks toward places that are showing economic growth, and as a result, better investment opportunities arise, leading to the exchange in the country strengthening.
Moreover, when a country has high interest rates it entices more foreign investors to the market because it creates the opportunity for high yield. However, the steady growth of an economy and interest rates or attractive yields are inexorably interconnected.
For your information, here are some examples of what a significant news event might look like:
Decisions on interest rates by the central banks : rising rates usually entice more global investors which strengthens the currency. Trade deficits : this entails larger transnational capital flows that affect exchange rates CPI data: this analysis inflation and can affect central bank policy Consumer consumption: this can be a driving factor that leads to growth in a nation’s economy. Unemployment rates: measures how many people are unemployed. A lower unemployment rate usually equates to a stronger economy and currency. Recent data on the Australian unemployment rate, for example, helped shed some light on the recovery of the forex market. Gross Domestic Product (GDP) : measures the goods and services a country produces. Consumer confidence: measures consumer thoughts on the economy and the effects on consumer spending. Retail trade: measures consumer spending which drives economic growth.
COVID-19’s Impact on the Forex Market ��
How exactly has COVID-19 affected the forex market? Some experts agree that it has done wonders for forex trading; completely re-energizing the market. And its profound impact is set to continue for a long while. A recent Refinitive webinar took a closer look at which factors are affecting the demand for the U.S. dollar.
First, the unemployment rate in the U.S. has climbed to levels above anything seen during the 2008-2011 financial crisis. As a result, demand for the dollar has soared with investors looking for a safe-haven currency.
Moreover, the increase in short-term emotional trading has driven current movements in the demand for the dollar. Short-term gauges do not appraise the influence that long term factors will have such as increased government borrowing and mass unemployment.
What Does the Dollar Index Tell Us? ��
For now, Leung’s Revinitiv is analyzing U.S. interest rates, U.S. equities, and unemployment. Any currents in the data points indicate sustained dollar strength. Tools such as currency strength meters can be used to further examine the strength of individual currencies, as opposed to currency pairs.
Each data point enumerated is undergoing volatile movements, but in the short haul, will strengthen traditional haven currencies such as the U.S. dollar, the Japanese yen, the Swiss franc, and gold.
That said, we are still only at the beginning of the economic response to COVID-19—in the end, this will only broaden our understanding of such events and give us experience in how to navigate it as traders.
The Bottom Line.
We’ve gone through a good bit of information but really, it’s all quite straightforward. You can start off by getting organized – when creating your trading schedule, know exactly when and which markets are overlapping.
To take advantage of the best opportunities, pay close attention to the economic news releases that could impact your chosen currency market, and are relevant to you . Some forex brokers focus on offering quality research tools and data to help with this.
Mastering this balance will allow you to create some peace of mind for yourself because you’ll know, at all times, when the best time to make your next move will be.
Congrats on making it this far! ��
You’re now an expert on the impact that time zones and market hours have on the forex market. The next step is to use a reliable broker while trading: