Intro: “When to trade in forex?” is probably the most asked question by the day traders around the world. Especially the new traders in search of the best time to trade in forex are mostly left concerned and confused over this. If you are a swing trader, position trader or long-term trader it actually doesn’t matter to you.
The new traders have to go through the economic calendar and trade according to every release of data. However, the forex market doesn’t have a specific run time around the world. In fact, in four different parts of the world, the market runs according to the respective business hours in respective time zones. This apparently means trading in the Forex market runs all day and night.
So the next question in your mind is, “Do I need to get going all day and night to trade in forex?”. As you already know, if you’re a short time trader, you actually don’t need to be on it all day and night. If you get a good understanding of trading hours, follow some strategy and data, you can also make profit out of it.
Forex market hours in different parts
As you already know that the forex market runs in four different time zones, we’ll now discuss a few major markets around the world. Please note that the following times follow Eastern Time Zone(ETS)
London, United Kingdom
London is one of the centers of attention to the world economy and is a “command center” for international business and commerce. The market opens at 3:00 am here and runs till 11:00 am. According to the reports, London is the global hub for forex with a market share of 43%. The technical traders in the market should keep in mind that forex trends mostly start from London.
New York, United States
New York is considered the second largest forex market in the world after London. The market opens at 8:00 am and runs till 5:00 am. This market is a hot cake for foreign investors as global transactions mostly depend on the US dollar.
Tokyo is considered the Asian capital of forex trading. The market opens at 7 pm and runs till 4 am in the morning. Japan has the third-largest national economy in terms of Nominal GDP. Japanese Yen(JPY) is the third most traded currency after US dollars(USD) and Euros(EUR).
The trading day officially begins in Sydney after a break since Friday. The market opens at 5:00 pm and runs till 2:00 am. Though it is the teeny-weeny among the mega markets, it witnesses the very first changes after the break.
Best time to trade in forex
You already know that the forex market is open globally 24 hours a day and 5 days a week. This gives you the flexibility to trade at your preferable time from anywhere in the world. Hold on! Though the market is open all day & night, it doesn’t really mean that they hold equal value throughout. The forex market also has both idle and bustling hours.
High volatility and overlaps are the best time to trade in the forex market. The market sees the highest number of participants when two trading sessions are overlapping. The rise in the number of traders who diligently buy and sell currencies causes reduced spreads and increased volatility.
- The New York and London overlap: This overlap is the most significant in the forex market and during the entire time US dollar and the Euro are the most popular trading currencies. This overlapping leaves a major impact on forex trading around the world.
- Sydney and Tokyo overlap: The Asian trading session begins with Sydney and Tokyo and they almost overlap the entire time. Unlike The New York and London overlap, there is not much movement seen during this overlap.
It is very important to keep an eye on the news and media before investing time in forex because if you can’t make a profit from the market if there is political or economical unrest rising up.
This is obviously not the best time to trade in forex. It is important for you to take the advantage of market overlaps. Traders who want to increase their profits can try to trade at more turbulent times while keeping an eye on new economic data