An infant trader must be aware of the forex market hours. You must know when the forex market opens and closes, besides the information on the important global sessions. By the end of this article, you will have a complete understanding of Forex hours and sessions. You may have a question about why I can only trade Monday through Friday since Forex is a 24-hour market.
This generally brings a fairly misconception in the forex world: the market closes on weekends. In reality, the forex market never closes, but retail traders are restricted from participating.
A retail trader is someone who trades for their own account rather than for the account of another company or organisation. Although retail traders cannot participate on weekends, the forex market as a currency exchange remains active.
This creates “gaps” when the market opens at the beginning of the week. It is merely the consequence of your broker’s charts being updated from the previous week’s price action to the current price action at the start of the trading week.
We’ll talk about gaps later. For the time being, keep in mind that the market never closes owing to the needs of international trade and central banks and global industries to conduct business.
So, when exactly does the forex market open?
The market has traditionally been divided into three peak activity sessions: Asian, European, and North American. These three time periods are called the Tokyo, London, and New York sessions.
A fourth Australian (Sydney) session is sometimes utilised to bridge the time difference between New York and Tokyo. Because the cities are the key financial centres for each area, these national and city names are used interchangeably.
When these three powerhouses conduct business, the markets are most active since most banks and corporations perform their day-to-day transactions in these regions.
While reading the previous section, you may have noticed that at various times of the day, more than one market is open simultaneously. These overlapping times often give the greatest degree of liquidity in certain currency pairs and wider pip range movements.
This makes these more liquid periods, at least theoretically, better times to trade.
Since greater liquidity and a higher volume of trades are frequently more beneficial to the speculative forex trader, certain times when trading is heavier in certain currency pairs might provide a trader with the necessary edge to be profitable.
This is especially true for traders using short-term strategies like scalping or day trading.
This overlap is a key forex trading period when both the major forex trading centres in New York and London are open for business. During this period, trading in all European currencies is at its peak, with the maximum liquidity available for currency pairs involving the Euro, Pound Sterling, and Swiss Franc.
Such very liquid overlapping hours would include the important 8:00 am to 11:00 am period when both New York and London’s major trading centres are open for business. Frankfurt is also open from 8 am to 10 am.
Furthermore, whether you are trading the EUR/USD, GBP/USD, or USD/CHF currency pairs, the market for these currency pairs will most probably be the most active during that time period since they represent the major currency pairs involving the United States and European nations.
Sydney closes at 1:00 am, whereas Tokyo, Hong Kong, and Singapore remain open until 2:00 am and 3:00 am, respectively, overlapping with Frankfurt and London. This is often when the Japanese Yen and European Yen crosses have the maximum liquidity.
Another favourable time to trade to take advantage of many markets being open at the same time is between 1:00 pm, and 3:00 am when Asian and European markets overlap at various intervals.
During the overlap period, the currency markets in Tokyo, Singapore, and Hong Kong continue to trade. The Frankfurt and London markets then open at 2:00, and 3:00 am, respectively, and overlap with Singapore and Hong Kong until 5:00 am.
This time period might see particularly busy trading in the currency pairings USD/JPY, EUR/JPY, GBP/JPY, and CHF/JPY.
This is the time when the markets of New Zealand and Australia overlap with those of Tokyo, Singapore, and Hong Kong in Asia. This is the most liquid period for the Australian and New Zealand Dollars and their cross rates.
Trading in Australia and New Zealand overlaps with Tokyo from 7:00 pm, then with Singapore and Hong Kong from 9:00 pm till New Zealand shuts at Midnight and Sydney closes at 1:00 am.
This makes the overlap period from 9:00 pm to Midnight especially liquid since Australia, New Zealand, Tokyo, Singapore, and Hong Kong are all open.
This overlapping time period is often characterised by especially busy trading in the currency pairs AUD/USD, AUD/JPY, EUR/AUD, NZD/USD, AUD/NZD, and NZD/JPY.
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The four major forex exchange markets in the global market are London, New York, Sydney, and Tokyo. Day traders often pay attention to the hours when two exchanges overlap.
While some investors fear market volatility because it increases risk, forex traders often prefer greater volatility since it increases their chances of success.
Despite the fact that each exchange operates independently, they all trade the same currencies.
As a result, when two markets’ exchanges are open, the number of traders actively buying and selling a particular currency increases greatly. Bids and asks on one forex market exchange immediately affect bids and asks on all other open exchanges.
This reduces market spreads while increasing volatility, particularly in the following time frames (all times are in EST):
There may be exceptions, and the expected trading volume is based on the assumption that there would be no major news. Political or military crises during ordinarily quiet trading hours can increase volatility and trading volume.
Key economic data that has the potential to impact the market is released regularly. Employment figures, the Consumer Price Index (CPI), trade deficits, consumer confidence, and consumer consumption are all important economic data. Knowing when this information is expected to be released will help you plan when to trade.
Forex trading is risky. New forex investors might consider opening accounts with companies that provide demo platforms, which allow users to simulate forex trades.
You may tally your profits and losses with practice trades to see how you would do in real trading. Investors who have gained enough expertise may start making real forex trades.
You may make significant profits, but you can also lose money, just as with any other investment.
The forex market’s ability to trade 24 hours a day is owing in part to numerous international time zones, as well as the fact that trades are conducted through a network of computers rather than any one physical exchange that closes at a particular time.
Fibonacci extensions - A Fibonacci tool — 2023For instance, when you hear that the US dollar closed at a given rate, it simply means that it was the rate at market close in New York. Currency, unlike securities, continues to be traded across the globe long after New York closes.
A particular country’s stocks, bonds, and commodities are not as relevant or in demand on the international stage. They are not required to trade beyond the issuer’s home country’s standard business day.
Due to the focus on the domestic market, the demand for trade in these markets is likely to justify opening 24 hours a day, implying that few shares would be traded at 3 am in the United States.
Europe’s major financial cities are London, Paris, Frankfurt, and Zurich. Banks, institutions, and dealers conduct forex trading for themselves and their clients in each of these markets.
Every forex trading day starts with the opening of the Australasia region, followed by Europe, and finally North America. As one region’s markets shut, another opens or has already opened, and the forex market continues to trade.
These markets often overlap for a few hours, producing some of the busiest forex trading times.
For example, suppose a forex trader in Australia wakes up at 3 am and wants to trade currency. In that case, they will be unable to do so with Australasia-located forex dealers, but they may make as many trades as they like through European or North American dealers.
Most trades are conducted on candlestick charts showing price movement over a certain time frame. While the timeframe of these candles will always be the same, fluctuation in daylight savings (DST) time throughout the globe may affect the times that these candles begin and end, measuring a specific time frame.
For example, the 4-hour candle that opens at 6 am. UK time on UK MT4 platforms in the summer will shift to 5 am in the winter when the clocks fall back, implying that instead of closing at 10 am, it would close at 9 am. This is important for analysing charts and making trading decisions.
If a trader is accustomed to checking the charts at specific times each day and trading at the open or close of certain candles, they will need to modify these times to gain a practical perspective of the market and place their trades at the correct times.
Besides local time changes, differences in daylight savings time throughout the globe may also have an impact.
A broker based in Cyprus, for example, operates on GMT time. As a result, when the clocks go back at the end of October, the time the candles on its MT4 platform begin and stop measuring each session will be one hour later.
To check your country’s forex market open time, you can go to Forex Time Zone Converter.
The forex market is a 24-hour market with advantages and disadvantages. Learn more about trading as a beginner before you get started.
However, I would point out that the disadvantages usually apply to individuals who are just starting. In fact, we are confident that the disadvantages listed below make the forex market one of the most difficult markets to master as a new trader.
The Tokyo session begins at 12 am and concludes at 9 am UK time throughout the autumn and winter months. It is one of the world’s largest forex trading centres, with roughly one-fifth of all forex transactions taking place during this session.
During the Asian session, currency pairs containing the yen and Asia Pacific currency pairs such as AUDUSD are anticipated to see higher movement.
The London forex market opens at 8 am. UK time accounts for around 35% of all forex transactions (an estimated £2.1 trillion per day).
Because of the large volume of trading during the London session, forex spreads are expected to be lower since liquidity is higher. However, the London session is extremely volatile, making it the best time to trade the major currency pairs, which have lower spreads owing to the high volume of trades. This session ends at 4 pm.
The New York session will begin at 1 pm and end at 10 pm UK time. Because of the overlap with the previous London session, there is higher liquidity at the start of the New York forex market hour’s session. As the trading day finishes, there is usually little movement in the market.
The Sydney forex market is open from 8 pm to 5 am. UK time, completing the 24-hour forex trading cycle.
