The ‘open all hours’ 24/5 aspect of the forex market can be one of its greatest appeals, but to inexperienced trading novices, the desire to hit the market running right away can be their immediate downfall.
Though it may be tempting to trade all day and night, this strategy can not just deplete a trader’s reserves rapidly, but can also burn out even the most avid of forex traders. That’s why in today’s post, we’ll be showing you the best time to trade forex, offering our expert forex trading tips and tricks to demonstrate that (sometimes) timing is everything.
When does the forex market open?
Unlike other trading markets, the opening hours of the forex market are determined by four separate time zones, meaning trading windows are consistently open. The opening times of the four markets are as follows (times given in GMT):
- London – 8am
- New York – 1pm
- Sydney – 10pm
- Tokyo – 12am
When does the forex market close?
The closing times of the aforementioned four markets are as follows (times given in GMT):
- London – 5pm
- New York – 10pm
- Sydney – 7am
- Tokyo – 9am
When to buy and sell forex
To incorporate the day-to-day business hours of the various global time zones, there are overlaps in the market hours. These overlaps provide the best opportunity to trade, as overlaps result in higher price ranges and, subsequently, better opportunities. Everyday, there are three market overlaps (times given in GMT):
- New York/London (1pm-5pm) – The New York/London overlap is the longest that occurs, providing a 4 hour trading window. This window is the best time to trade forex in the UK, with more than 70% of all trades occurring in this time. Consequently, volatility is high
- Sydney/Tokyo (7am-9am) – Although not as volatile as the New York/London overlap (due to the Euro and USD being the two most prominently traded currencies), this window still offers the opportunity to trade in a window of higher PIP fluctuation. It’s best to trade with the primary currencies influenced by this overlap; trading in EUR/JPY pairings is our top tip here
- London/Tokyo (8am-9am) – Seeing the least amount of trading action, this small overlap window gives little opportunity to see large PIP changes occur
As a rule of thumb, the most optimal time for trading is when the market is most active. This occurs during these overlap windows, with heightened trading activity leading to greater fluctuation in currency pairings.
But which market is right for me?
Choosing which market to trade on should generally be influenced by your choice in base currency. Each boasts its own individual advantages, however:
- London – Dominating the currency markets across the globe, London serves as the trading capital of the world. With just over a third of global trading thought to go through the city, heightened market activity is guaranteed during UK hours of operation
- New York – The globe’s second largest forex giant, the New York market is heavily observed by foreign investors – this is hardly surprising given how an unrivalled majority of currency trades involve the USD
- Tokyo – GBP/CHF, GBP/JPY and USD/JPY pairings are the ones to watch within these trading hours, with the latter performing particularly well when Tokyo is the only open market – this is due to the heavy influence the Bank of Japan has over currency exchange rates and activities
- Sydney – Despite this being the smallest of the mega-markets, the Sydney market does experience a lot of initial action as the first market to reopen after the weekend break
Now that you know which market hours best suit you and your trading desires, ensure you know how to put your strategy into practice by attending one of Learn To Trade’s free industry seminars. You can sign up right here.