Best Time to Trade Forex

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With the Forex market open for 24 hours for five days a week, many new investors feel tempted to trade around the clock. In reality, though, it’s one of the most significant mistakes one can make when starting their Forex trading journey. First of all, checking the foreign exchange market every five minutes can quickly become tiring. Secondly, constant trading often causes losing money rapidly. In other words, Forex trading hours matter.

Each trading session provides different trading opportunities, with the best time to trade Forex being when the market is most active. During these sessions, trading spreads tend to narrow, meaning there are smaller differences between bid and ask prices. It also means that fluctuations in currency pairs are more significant, providing traders with better Forex trading opportunities.

Understanding when to trade Forex is vital for any trader, which is why we’ve decided to cover this topic in more detail. Below, you’ll find everything you need about Forex market opening times and the best (and worst) times to trade.

4 Forex Market Opening Hours

As you already know, the foreign exchange market stays open 24 hours for five days, with each day being broken into several trading sessions. That’s because the Forex market is open during regular business hours in four different parts of the world, meaning Forex market hours are divided into different timezones.

Essentially, there are four major worldwide Forex markets, located in New York, London, Sydney, and Tokyo. They divide each trading day into three primary sessions – the Asia-Pacific session, the European session, and the North-America session.

Below is a quick breakdown of FX market opening hours:

  • London Session. London is the largest currency market worldwide, accounting for approximately 43% of global currency trading. London session starts at 8 AM GMT and closes at 4 PM GMT.
  • New York Session. New York is the second-largest Forex trading market globally. New York sessions last from 1 PM GMT to 10 PM GMT, and they’re heavily watched by non-US investors, with the large majority of Forex trades involving the US dollar.
  • Sydney Session. Sydney session is when trading officially starts, with the Sydney market open from 10 PM GMT to 2 AM GMT. It’s the smallest of the four primary markets, but it tends to include a lot of initial action from financial institutions and traders.
  • Tokyo Session. Tokyo is the largest FX platform among Asian markets. It’s also the first to open, with Tokyo sessions lasting from midnight to 9 AM GMT.

Mind that all trading sessions are given in GMT – Greenwich Mean Time (the UK time zone). Numerous other sites (especially US ones) tend to use EST (Eastern Standard Time). To avoid confusion when trading Forex, it’s best to stick to one time zone. When it comes to UK traders, the most convenient is to use GMT.

The Best Forex Trading Times

With the Forex market opening at 10 PM GMT on Sunday and closing at 10 PM GMT on Friday, investors have plenty of opportunities to perform Forex transactions. However, as you already know, not all trading hours are equal. The best time to trade Forex is during the highest trading activity periods. This is when trading spreads are the most narrow and more significant fluctuation in currency pairs, providing investors with the best opportunities.

When is the best time to trade Forex, though?

Overlapping Forex Trading Sessions

Essentially, it’s most recommended to trade Forex when multiple sessions overlap. These are the busiest periods, resulting in higher price ranges and greater investment opportunities. We can generally distinguish three overlaps occurring each trading day – New York and London sessions, Sydney and Tokyo sessions, and London and Tokyo sessions. Let’s take a closer look at them and what kind of trading chances they provide:

  • New York/London Session (1 PM – 4 PM GMT). As covered, London and New York exchanges are the two most popular currency markets globally. When they overlap, it means that the number of traders is the highest (approximately 70% of trades happen during this Forex session), meaning the price volatility increases, providing investors with fantastic opportunities.
  • Sydney/Tokyo Session (12 AM – 2 AM GMT). In general, the Asian session isn’t as popular as New York or London exchanges. Still, when Tokyo and Sydney exchanges overlap, it offers some great opportunities, especially involving the EUR/JPY currency pair, as these currencies are ones being heavily impacted during this time period.
  • London/Asian Session (8 AM – 9 AM GMT). The overlap between London and Toko exchanges involves the lowest trading volume among the three overlaps. It’s also the shortest, so it isn’t as attractive as the remaining two. Still, it does provide several opportunities traders can take advantage of.

It’s important to note here that there can be exceptions, especially during political turmoils or potential significant news releases. These can have a massive impact on currency price movements. Specific economic data can also affect the Forex market. It’s best to keep them in mind when joining certain Forex trading sessions.

Monday Afternoon

While Monday mornings aren’t considered the best times to trade Forex, Monday afternoons are a different kettle of fish. Indeed, they’re considered the best time to trade, with trading volume increasing, especially during the London/New York overlap. This is when the market reaches its peak liquidity, providing you with the best potential trading performance.

London Session

If you don’t want to wait for overlapping markets, sticking to trading during the London session seems like the best idea. It’s by far the busiest session among the four, especially when its opening hours overlap with the New York exchange. As mentioned, the London session involves approximately 43% of global currency trading, with the rate reaching around 70% when the New York session comes into play.

The Worst Times to Trade

Since there are the best times to trade Forex, it’s natural that there are also the worst times to do it. These are the periods that include the highest risk rates or lowest trading activity. Below, we’ve listed the three most significant periods during which trading Forex might not seem like the best idea.

Major News Releases

We’ve already mentioned that certain news releases can hugely impact the Forex market. Like any other market, Forex is driven by economic information, political news, and financial reports. These can significantly enhance any trading session, providing investors with numerous excellent opportunities. However, they can also ruin your trading plan.

Of course, we’re not talking here about all news releases happening in every particular country every single day. There are several news releases that any aspiring trader should be aware of, though. The most significant ones can include:

  • Decisions involving the country’s interest rate
  • Consumer Price Index (CPI) data
  • Current consumer consumption
  • Gross Domestic Product (GDP) data
  • Unemployment rate
  • Trade deficits
  • News involving major political changes and turmoils

In general, the more positive the news, the more investors are likely to get involved and vice versa. It’s good to keep an eye on the Forex market-related data before joining a trading session and stay ahead of possible problems. It can also help you find new investment opportunities.

National Holidays

You might think that with more people having more time during national holidays, it means they can focus on trading. Unfortunately, such periods rarely, or ever, translate into higher trading activity. That’s mainly due to the fact that banks don’t make any financial transactions during national holidays, and with them being one of the most significant influencers on the Forex market, it translates into a much-decreased volume of transactions.

Late Sunday and Early Monday

As covered, the Forex market doesn’t reach its peak volatility until the latter trading sessions. This is especially true at the beginning of the week, with late Sunday/early Monday sessions being the worst periods to trade. What’s more, many traders don’t even use these to get involved in active trading, focusing more on planning and accessing the market situation for the upcoming week. Of course, you can still trade during these sessions, but with most investors not getting involved, it may be the best idea to do the same.

Key Takeaways

Forex trading provides investors with a fantastic opportunity to make tons of money. It’s also a great platform for beginning traders to understand the rules of the trading game with the Forex market being less risky than many others trading platforms.

However, if you want to start trading Forex for real, it’s best to precede it with thorough investment research. When it comes to that, one of the most significant pieces of information to know is when is the best time to trade Forex. As you can see from this article, despite being open for 24 hours five days a week, not all Forex sessions are equal, with some providing traders with many more opportunities than others.

We hope that now you understand how Forex market hours work and their impact on one’s trading. And if you want to learn more about the Forex platform, be sure to read our dedicated blog posts where we explain in more detail how the foreign exchange market works.

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