What is the Best Time to Trade the Forex Market?

What is the Best Time to Trade the Forex Market?

What is the Best Time to Trade the Forex Market?

Although the Forex market is open 24 hours a day, there are a few hours that are considered the best times to trade Forex. It is extremely important for a trader to identify these times so as to increase profit potentials.

This article will not only cover the topic of Forex active hours, but also reveal the overall trader mindset towards market hours on the whole.

To understand whether there is a best time to trade currencies pairs, first you need to know the actual operating hours of the different market sessions Sydney, Tokyo, London & New York.

Below are the operating hours in Greenwich Mean Time (GMT).

From the above grid, you will notice that there are three times when trading time zones overlap. Meaning two markets are traded concurrently.

23:00 06:00 GMT Sydney and Tokyo Overlap.

07:00 08:00 GMT Tokyo and London Overlap.

16:00 21:00 GMT London and New York Overlap.

In Forex trading, when two markets are open concurrently, there is usually more volume and volatility.

There are three main trading time zones. TheLondon sessionopens from3:00 amto11 am, theNew York session whichis open between7:00 amto4 pmand theJapan/Australiasessionwhich is open from7:00 pmto3 am.

As you can see, the forex market is active all through the day. However,price movements and trading volume are not uniform through all these sessions.At times, it is best for traders to leap into the market and at other times, it is best to just stay away from it.

The central idea here is to get involved in the trade when the markets are extremely busy.Remember, all of the currencies react in different ways during every session. For instance, during the New York market, the British Pound, US Dollar, Australian Dollar, Euro, Canadian Dollar, Japanese Yen and New Zealand dollar are extremely active and when the London market is open, the Swiss Franc, Euro, British Pound and US Dollar are the most active currencies.

Many traders agree that the best time to trade currency pairs is in the first3 to 5 hours of all the sessions, particularly when your fundamental analysis points on the new economic calendar are released. Therefore, it is best for you to trade in between3 amand11 am.

The reason is that the New York and London market overlap during these active trading hours, which creates loads of trading opportunities that are boosted with regular price movements. If you have a proper trading plan in place, together with a money management system, it is not hard to see profit potential up to hundreds and thousands of dollars in just a few minutes depending on your lot size.

The pairs of currencies that happen to be the most active during the overlap areGBP/USD,USD/CHF,USD/JPYand finallyEUR/USD. The three hours in between8 amand11 amare particularly profitable as a number of economic releases are made between them, which can help you make substantial profits.

Statistically speaking, the best times to trade Forex is on the hours mentioned above. Thebest days to trade are on Tuesdays and Wednesdaysas the peak trades take place during these two days.

Many traders do not trade on Sundays, as nothing significant really happens in currency rates. They also avoid trading late on Fridays, as the market is extremely unpredictable due to the weekend. Holidays are avoided too.

Knowing the active hours is only the beginning of the story. What is more important is that every trader has to understand their trading style. You need to ask yourself these questions. Are you a long term trader? Are you a swing trader? Are you a intraday trader?

If you dont even know what type of trader you are, it will not be easy for you to be successful in this business.

In the forex, unlike equity trading, there are very few long term investors. Long term traders dont bother much about market hours, as their open trading orders normally attempt to bypass all the short-term volatility of the market.

Swing traders who hold their position for one or more weeks are also not too concerned about market hours. Their main concern will be for entry or exiting of trades when more than one market is open to take advantage of more volatility.

Of all the trading styles, intraday traders are the ones most concerned about Forex active hours. For Intraday traders, they will most likely prefer to be around when more than one market is open. London session provides the most liquidity and volatility. London operating hours also overlaps two other markets, namely the Tokyo market and New York market.

It is also important to trade the currency pairs that are related to the particular markets open. For example, when Sydney and Tokyo markets are open, currency pair such as AUD/JPY will have increased volatility compared to New York market opens. Likewise, when the London market is open all the currency pairs such as EUR/GBP and EUR/CHF will tend to move more than in Sydney session.

The Forex market is truly a connected global market. That is to say, when a particular currency pair makes a big move, dont even think that other ones will not! Hopefully, the above information helps you decide what trading time is best for you. However, there is a saying that big and successful Forex traders never sleep, as the market is always open for business!

What is the Best Time to Trade the Forex Market?

Many Forex traders agree that the best time to trade Forex pairs is in the first 3 to 5 hours of all the sessions, particularly when your fundamental analysis points on the new economic calendar are released. Therefore, it is best for you to trade in between 3 AM and 11 AM.

Business leader, professional trader and trading mentor scratch the surface of describe Tyson Clayton, a Product Expert with Market Traders Institute. With over a decade of trading experience in the commodities and Forex markets, Tyson is a proven leader, instilling positive change and the ability to bring the best out of everyone.

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