When Is the Best Time to Trade the Forex Market?

Best Time to Trade the Forex Market

Are you a newbie in the Forex market? Get in here! Do you know when is the best time to trade the forex market? Okay, let’s find out.

The newbies’ forex traders hit the market successively by observing various monetary calendars, occasionally viewing the foreign exchange market as a suitable way to trade all day long, and eagerly selling every piece of information they get. Although these are great trading strategies, unfortunately, they rapidly drain a trader’s capital and exhaust even the most persistent trader. 

The forex market, also referred to as the foreign exchange market is a universal decentralized market. Unlike Wall Street, which runs during regular corporate hours, the forex market operates during normal business hours of four countries with their respective time zones, meaning trading occurs anytime.

The best time to trade in the forex market is during an overlap in the trading periods. The market is said to be usually active and influential during this period. 

During an overlap, trading spreads due to the activeness of the market, and the differences between offer and ask prices tend to be minimal. Therefore, the market makers facilitating currency trades get little returns, while the traders gain more returns on their investments.

With this, a trader with an in-depth knowledge of the market timetable and appropriate targets has a higher chance of making greater profits within a reasonable time frame.

What Are the Available Forex Markets?

London, Tokyo, New York, and Sydney are the central forex markets worldwide. These important markets’ time and location differences make the foreign exchange market a 24-hour call, making trading possible anytime. Although there are no fundamental rules for forex trade, it’s done through a universal web of banks, brokers, and dealers.

Forex Trading Time: When Does the Forex Market Open?

While the forex market opens 24 hours daily and five days weekly, each day divides into various bouts. The Asia-Pacific session opens first, then the European (London) session, and North America opens finally.

Below are the foreign exchange trading hours of each session:

  1. London – Starts at 3 a.m. and ends at 11 a.m. (EST)
  2. Tokyo – Begins at 7 p.m. and ends at 4 a.m. (EST)
  3. New York –  Starts at 8 a.m. and ends at 5 p.m. (EST)
  4. Sydney – Opens at 3 p.m. and closes at midnight (EST)

Note: The forex trading time may vary in March, April, October, and November as countries move to and from daylight or summer on different days. 

The Best Time to Trade The Forex Market

Foreign Exchange trading is exceptional because of the uniqueness of its periods of operation, each day of the week. For example, the week starts at 5 p.m. EST on Sunday until 5 p.m. EST on Friday. Although in addition, not all hours of the day are suitable for trading. The best trading hours are when more than one of the four markets is open simultaneously.

This enables a keen trading environment, meaning there will be substantial instability in the exchange pairs as a result of the activeness of the market.

If one market opens, currency pairs get hooked in a tight price interest of 30 pips movement. However, two markets opening simultaneously can see movement north of 70 pips, mainly when a major update is released.

Overlaps In Forex Trading Times

As mentioned earlier, the ideal time to trade is during overlaps in trading times between open markets. Technically, 2 overlaps equal higher return ranges, resulting in more opportunities. Here is a breakdown of the three overlays that occurs in the daytime:

  1. U.S./London (8 a.m. – 12 noon daily): The substantial overlap within the markets happens in the U.S./London markets. Over 70% of every exchange transpires when these markets overrun because the U.S. euro (EUR) and the dollar are the most prevalent currencies to trade. This is the best time to trade since instability or price movement is more.
  2. Sydney/Tokyo (2 a.m. – 4 a.m. daily): This time frame is not as explosive as the U.S./London overlay but allows trading in a time of higher pip instability. EUR/JPY is the best exchange pair to aim for, as they are the two significant exchanges regulated.
  3. London/Tokyo (from 3 a.m. – 4 a.m. daily): This overlap views the slightest action of the three due to the time zone (most U.S.-based traders will be asleep at this time), and the one-hour overrun gives little chance to see more significant pip changes happen.

The Bottom Line

Taking advantage of market overlaps and keeping an eye on news releases when setting a trading timetable is crucial, and for me, that is the best time to trade the Forex market. Traders aiming to get returns should be ready to trade during more volatile periods while checking the release of the new economic update. This stability allows full-time and part-time traders to set a trading calendar that will give them peace of mind, knowing that chances are not sliding away when they are sleeping or not paying attention to the markets.

I hope you find the information in this article helpful. If you have any further questions, please share them with me in the comments. I’ll be glad to hear from you. 

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