Unlike most other markets, the Forex market is open 24/7, 5 days per week – from Monday morning in New Zealand to Friday evening in New York. This means that Forex traders can trade at any time of the weekday, day or night, wherever they are.
Forex traders have plenty of choice about when to trade, so in this article I will examine what are the best Forex market hours for traders, to help you decide when to trade to give yourself the best chance to trade profitably.
Understanding the Forex Market Clock
At any given time between Monday and Friday, at least one of the four major Forex markets is open for business, and three times during each 24-hour period, two overlap. This creates volatility and liquidity, the latter resulting in tighter spreads and lower trading fees and costs. The four sessions together account for over 75% of all Forex trading volume and generate the most trading opportunities.
Which are the four major Forex markets, and when do they officially open and close for business?
Sydney opens at 22:00 UCT (17:00 EST) and closes at 07:00 UCT (02:00 EST)
Tokyo opens at 24:00 UCT (19:00 EST) and closes at 09:00 UCT (04:00 EST)
London opens at 08:00 UCT (03:00 EST) and closes at 17:00 UCT (12:00 EST)
New York opens at 13:00 UCT (08:00 EST) and closes at 22:00 UCT (17:00 EST)
Which trading sessions overlap and when?
Sydney and Tokyo between 24:00 UCT (19:00 EST) and 06:00 UCT (01:00 EST)
London and Tokyo between 08:00 UCT (03:00 EST) and 09:00 UCT (04:00 EST)
London and New York between 13:00 UCT (08:00 EST) and 17:00 UCT (12:00 EST)
The graphic below shows each of these sessions in UTC time. Note that local changes to summer time can alter these sessions by an hour.
Forex Market Clock
Noteworthy:
Dealing with time zones may appear confusing, but a Forex market hours chart can be easily built to display Forex market trading hours and show the trading sessions overlap. This allows traders to set their time zone, for example, Forex market hours EST, and display all relevant information. Active traders will easily get come to know how the time in London, New York, and Tokyo relates to their geographical location and time zone and remember it – it doesn’t change, although it can be off for a week twice a year when the US changes its clocks by one hour later than much of the rest of the world.
When Should Forex Traders Trade to Get the Best Results?
The London and New York overlap accounts for over 50% of all global Forex trading volume and remains by far the most significant Forex trading period. The UK is the largest single Forex market with approximately 43% of all trading activity. The US comes in second with 19%. Completing the top five are Singapore and Hong Kong with almost 8% each, followed by Japan just under 5%.
Volume of trades is important because it tends to correlate with pip movement: the larger the amount traded, the more the price tends to move. The more the price moves, the more profit can be made trading. The London and New York sessions, especially for non-Asian currency pairs, usually produce the greatest pip movement in currency pairs and crosses.
Forex traders should trade during:
The first and last hour of each of the major Forex market session. They present more liquidity, tighter spreads on currency pairs, and lower trading costs.
Each trading session overlap, where Forex traders get the best trading conditions.
The entire London trading session, as it represents 43% of all trading activity.
Forex traders should not trade when:
The four major trading sessions are on an unofficial two-hour lunch break around noon local time. The lack of liquidity creates wider spreads, and any trends established remain prone to reversals.
It is thirty minutes before or after a major news release. These periods tend to be unpredictable and can create false breakouts/breakdowns. News trading is popular but usually too risky to be fruitful, so using a detailed economic calendar can help navigate this trading trap.
Not every currency pair has its largest price movements during the London and New York sessions. For example, during the Asian trading session, the Japanese yen, the Chinese yuan, the Australian dollar, and the New Zealand dollar tend to be active, which makes sense as the Asian session covers the business hours of these countries and of course when their stock markets are open. When money flows into a country’s stock market, it can cause the currency in which the stock market is denominated to rise as foreign currencies have to be converted into local currency to buy that market.
The European trading session tends to see most price movement in the euro, the British pound, and the Swiss franc. The US odllar, which accounts for the bulk of the trading volume, trades well throughout all trading sessions crossed with the above-noted currencies.
Another reason the Forex market moves more at certain hours than others is the scheduling of certain high impact events, or when unscheduled, when such events tend to happen. Events that can magnify Forex price swings include:
Economic reports
Geopolitical events and instability
Central bank interference and manipulation
Businesses hedging their currency exposure via swaps and futures
Why is the Forex Market Open 24/5?
Unlike equity or bond markets, the Forex market is necessary for around-the-clock trading. Imagine companies, governments, and even individuals having to wait for the Forex market to open for business. It would disrupt the global supply chain, harm the economy, and make day-to-day necessities impossible.
Reasons why Forex market trading hours are 24/5:
International trade requires ongoing Forex quotations to settle contracts. We live in an interconnected world with a global supply chain. Without 24/5 Forex trading, the economy would not function efficiently. Since we have more than twenty-four time zones, , the global economy relies on around-the-clock trading to ensure goods and services flow frictionless.
Central banks require 24/5 Forex trading as they frequently conduct currency swaps, also known as liquidity swaps. The idea is to maintain a stable financial system, especially during times of crisis and volatility. Some central banks also directly intervene in the Forex market. The Swiss National Bank (SNB) is the most active central bank, followed by the Bank of Japan (BoJ).
Global businesses have operations across time zone with daily capital needs, which require a Forex market operational 24/5. They require raw materials, finished goods, or services outside their domestic market. They also sell their products globally, using various currencies, which they convert to their home currency.
Without 24/5 Forex market hours:
Factories would deal with raw material shortages
Ports would face disruptions
Consumers would find empty store shelves
Online shopping would not exist
Governments would have no access to necessary capital
Our interconnected would disconnect
What enables around-the-clock Forex market hours?
The Forex market is decentralized, lacking a specific exchange or exchanges, taking place over the counter (OTC). Most transactions occur via the electronic communication network (ECN) or other computer networks. The absence of centralized exchanges and usage of computers form the backbone of the Forex market infrastructure. Every aspect of Forex trading remains automated, which is one reason many active market participants, professional and retail, rely on algorithmic trading strategies.
Sometimes, market reporters refer to a currency closing at a specific value. For example, the Euro finished at $1.1650 versus the US Dollar. This just means the latest exchange rate at the end of business in Europe, usually the UK, Zurich, Frankfurt, or Paris. The EUR/USD will continue to trade 24/5.
Final Thoughts
The Forex market is open 24 hours per day, 5 days a week, closing in the retail space only at weekends and some major public holidays. This means that retail traders can choose to access the market apart from at weekends whenever they want, regardless of geographical location. However, the Forex market is most active during the London / New York session overlap, which is widely regarded as the best time to trade Forex, and from the start of the London session generally until the end of the New York session, meaning traders in Europe, Africa, the Americas, and to some extent the Middle East are best placed to trade Forex during the most active sessions. However, Asian currencies tend to move a lot during Asian business hours, so there are Forex opportunities for traders located in Asia even without getting up to trade in the night. It is also quite possible to use many retail Forex broker’s trading platforms for automated trading, where the trader sets the rules for trades which can then be executed at whatever times trade setups may occur.
FAQs
What time do Forex markets open?
The Forex market is open 24/5 from 22:00 UCT (17:00 EST) on Sunday continuously until 23:59 UCT (16:59 EST) on Friday. Some market commentators refer to opening and closing hours of their domestic trading hours, which have no significance on the decentralized Forex market.
Does the Forex market run 24/7?
No, the Forex market runs 24/5 although there are a very few brokers which offer trading of some major currency pairs on the weekend.
Can you trade Forex at midnight?
You can trade Forex at midnight, but many brokers suspend new trade entry or exit order for a few minutes at the New York close to perform accounting for overnight swap rates on open positions.
https://www.dailyforex.com/forex-articles/forex-market-hours/170332
2021-11-04 06:43:17Z
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