Do you also feel that forex trading is super fancy?
There are charts, candles, currencies, and all those screens that blink like a spaceship dashboard. But when you enter it, you will get to know that it is not as fancy as it seems. It is a much complex world where traders keep on buying and selling currencies when the time feels right.
And the secret sauce to get profit out of this buying and selling of currency pairs is timing.
Yes, timing is important. But this does not mean that you need to be up all night like a Wall Street wolf or simply keep your eyes on your screen 24/7. So, if right timing is the factor that makes a huge difference, then understanding the forex market hours becomes crucial in identifying the perfect time to trade forex.
Below, in this guide, we will be knowing what the best time is to trade forex without any jargon.
What is the importance of timing in Forex?
The Forex is a market that operates 24/5 a week in 4 different sessions.
Unlike the stock market, which opens and closes at fixed daily times, forex just keeps on moving throughout the day and does not sleep. It opens on Monday morning in Australia and closes on Friday night in New York.
It sounds exciting, but here is the catch, which most traders (especially new ones) do not know, i.e., just because it is always open, it doesn’t mean that it is always active.
You can think of it as your favourite café, which is open all day. But not every time there is a crowd, or it is packed. Instead, there are peak hours when a lot of people come in, music is there, and the coffee machines are humming. That’s it. This is the actual vibe that you want in the forex market, as well, meaning high activity, lots of price movement, and better (and multiple) chances to gain some profit.
To learn more about the best forex market hours, let’s see what the major sessions of Forex trading are.
What are the Major Forex Sessions?
The forex world has four main trading sessions, and these are:
- Sydney Session
- Tokyo Session
- London Session
- New York Session
The Forex market wakes up with the Sydney sessions and sleeps with the New York session on Friday night. Also, the most important part is that each session overlaps a bit with the next, and that’s when things get interesting. This is because of the opportunity to have more traders, more volume, meaning more action.
Best Hours in Forex Trading
Now that you are familiar with the trading sessions, let’s learn about the golden hours when the forex trading market is alive and full of opportunities.
London and New York Overlap
(Around 1 PM to 5 PM GMT)
For most traders, the time when the London and the New York sessions overlap is the best time to trade.
Why?
This is because these are the two biggest financial hubs in the trading world, and they are getting both at the same time.
You can think of it like a concert where two headliners are performing together. Wow!!
During this time, the market has everything from volume and volatility to potential profit. Also, the major pairs like the EUR/USD, GBP/USD, and USD/JPY move a lot during this time making it ideal for EUR/USD forex trading for better results.
London Session Alone
(8 AM to 12 PM GMT)
Do you know that even without the New York session, the London session holds its importance?
During the London session, a big chunk of the forex volume of the day happens.
Also, it is worth noticing that during this time, the market awakens, fresh from the weekend (if it’s Monday). This means it is full of momentum.
Tokyo-London Overlap
(Around 7 AM to 9 AM GMT)
Honestly, the Tokyo-London overlap is not as exciting as the London-New York overlap, but still worth a peek, especially when you are someone who is trading Yen pairs like USD/JPY or EUR/JPY.
This was all about the best time. But, what about the worst time?
Is there a worst time for forex trading?
Yes, there are worse times as well. Let’s learn about this in detail below-
Worst Times to Trade
These can be seen as the forex nap time. These are the periods where trading feels like watching paint dry. It includes:
- Late friday afternoon: At this time, the market is about to close. Thus, traders are in a rush to close positions before the weekend. Because of this, there is little or less interest, fewer trades, and you may not get the kind of movement you want.
- Late Sunday/Monday morning in Asia: It is the time when the market opens, but actually, it is quite slow as most traders are still not active, yet. You can say that it is like the early morning before the city wakes up. So, you need to avoid this.
- Between Sessions: Let’s say, midday New York to late Sydney. During this time, the market gets sluggish where the volume drops, spreads can widen, and things just feel wrong.
Now you must be thinking, what about your time zone?
Good question!
The answer is that all of this timing talk is in GMT or UTC time, but here’s a tip. You need to figure out your local time difference with GMT (here Google can help you!) and then adjust accordingly.
Conclusion
To conclude, everyone says that forex trading is all about strategy, indicators, and fancy tools.
Honestly, they help.
But if you trade at the wrong time, even the best strategy might feel wrong. In forex, timing gives life to your trades. It gives your right strategy the environment that it needs to work.
So, if you’re just starting, try watching the market during the overlap periods. First, get a feel for the rhythm. Only this way, you will be able to notice how different the energy is. Someone said this right: Sometimes, just sitting and observing can teach you more than any course or eBook.
