In this article, we will tell you in detail about the different Forex trading hours, and how to choose the best session for your strategy. Let’s dive in.
Best Time To Trade Forex
What are Forex Trading Hours or Sessions?
The international currency market is a representative system of banks, large-scale companies, investment management agencies, hedge fund organizations, retail Forex brokers, and market investors. All of these systems work together to keep the market breathing in multiple time zones.
The global market is just as it sounds—global, not controlled or dominated by a single player. These markets operate within a fixed number of hours based on the time zones. At present, there are four trading sessions covering the globe:
New York: 8 AM to 5 PM EST
Tokyo: 7 PM to 4 AM EST
Sydney: 5 PM to 2 AM EST
London: 3 AM to 12 Noon EST
For this article, we’ll be using EST, but rest assured the principles apply to every market timezone out there. Forex trading hours start on Sunday evening EST (Asian session) and end on Friday night EST (New York session). This gives traders roughly five days of trading. However, there are only a few hours or days when the market has solid movement.
Understanding the trading hours and which sessions you should opt for is trading 101! So let’s learn about these sessions in detail.
Each of the Forex Trading Hours, Explained.
Time is of the essence in the trading market. During the weekdays, the market is open for 24 hours, but that does not mean it is operable simultaneously. There are three major trading sessions across the globe with slight overlaps in time.
Moreover, each market is different not only in terms of time but also in terms of its volatility, volume, and liquidity. Trading in a market when it is active is the most optimal way to move forward.
Understanding these trading hours will help you build the perfect trading strategy.
Asian Forex Session - Tokyo, Sydney
Asian Session – Tokyo, Sydney
The Asian session has two Forex markets – Tokyo and Sydney. Collectively, these two markets bring around 20% of the Forex trading volume. Let’s understand the two markets separately;
At the start of every week, when the liquidity from the global Forex market is restored, the Asian markets see the first action. While there are three main centers in this market, Tokyo, Hong Kong, and Singapore, the major activity comes from Tokyo.
According to the easter standard time, this market opens at 7:00 PM. The Tokyo market may not be as liquid as its counterparts, but it’s worth noting that that also means it’s not as volatile. During this session, most pairs tend to remain within a range. So this session is best suited for scalpers and short-term day traders. You may also find opportunities for breakout trades later in the day.
A pro tip for the Tokyo session: Never open a position when the candlestick breaks the first time. Rather, wait for the second time to get a confirmation break and then open the position at the opening price.
As this market mainly represents the Japanese Yen, making a trading pair where the JPY is present is better.
Sydney is the smallest of all the trading markets, but that does not mean it is without risk. In this session, the traders are busiest between 10:00 PM to 2:00 AM. Naturally, as this market is majorly concentrated in Australia and New Zealand, the traded pairs include Australian and New Zealand dollars.
Remember that in the Asian Session, the Sydney market opens first. This market’s trading volume, volatility, and liquidity can depend on Australia and New Zealand’s dealing with China and other export-intensive countries.
London Forex Trading Session
The European session also called the London session, is poised at the center of trading. It comes to life an hour before the closing of the Asian session, and its afternoon overlaps with the New York session. This makes it one of the biggest sessions with one of the highest liquidities and volume. London accounts for up to 34% of the daily Forex volume.
In the London session, other major European markets also partake in the trading action. The market trading hours also expand due to the presence of Germany and France’s capital markets. Due to the high trading volume and high-value transactions, the London session is among the most important markets in the world.
You can trade yen crosses at this time. GBP/JPY and EUR/JPY are the most volatile during this session.
New York Session – Most Popular
The North American or New York session is the most popular market. Since the New York session’s working hours overlap with the London session, it also sees a lot of volatility. However, the liquidity tends to die down in the afternoon after the European session ends. Also, this is the last market to close on Friday evenings for the weekend. Friday afternoon trading sees a high chance of reversal as traders often close their positions before the weekend.
Unsurprisingly, the USD is the most traded currency in the New York session. Some of the major currency pairs in this market are EUR/USD, GBP/USD, and USD/JPY.
To Sum It Up
Ultimately, the trading session you choose to operate in would depend on your currency pair as well as your trading style. Remember that high volatility also means high risk, so keep your risk tolerance in front of mind when choosing where and when to roll the dice.
Whichever market you choose to trade in, we recommend aiming to do so in the middle of the week, from Tuesday to Friday. This is when most traders are active and liquidities are highest.
Start trading with The Funded Trader to get the best exposure to the Forex trading markets and sessions today!