Forex Market Hours
The foreign exchange market is the most liquid financial market worldwide, with an estimated $5.3 trillion traded daily. Forex is an over-the-counter product, hence there is no central physical exchange where the currencies can be traded, unlike shares that are traded on various stock exchanges.
The forex market is an interbank market, with large banks acting as market makers, offering their own prices. This means there are fewer trading restrictions, such as when and where you can trade, unlike stock market hours, where traders are restricted to a weekday timetable with specific hours.
Forex trading hours around the world
The forex market is open 24 hours a day, from Sunday evening until Friday night. This is due to the various international time zones which allow you to trade all hours of the day. There are major trading sessions in these three locations:
- Tokyo (Asian session)
- London (European session)
- New York (North American session)
During the autumn and winter months, the Tokyo session opens at 12am and closes at 9am UK time. It is one of the largest forex trading centres worldwide, with roughly a fifth of all forex transactions occurring during this session. During the Asian session, there’s likely to be more movement in currency pairs containing the yen, as well as Asia Pacific currency pairs, like AUS/USD.
The London forex market opening hours start at 8am UK time and accounts for roughly 35% of all forex transactions (estimated £2.1 trillion daily). Due to the large volume of trading during the London session, there are likely to be lower forex spreads as liquidity is higher. However, the London session is also subject to high volatility, often making it the best to trade the major currency pairs, which offer reduced spreads due to the high volume of trades. This session closes at 4pm.
The New York session then opens at 1pm and closes at 10pm UK time. There is more liquidity at the start of the New York forex market hours session due to the overlap with the previous London session. Towards the end of the session, there is typically minimal movement as the trading day winds down.
The Sydney forex market hours are from 8pm to 5am UK time, completing the 24-hour forex trading loop.
WHEN IS THE BEST TIME TO TRADE?
European currency pairs have shown greater success when traded during the 19:00 -11:00 GMT period. The liquidity during this time is relatively low as the US session has little/no affect. This lower liquidity allows for range bound trading strategies with greater use of indicators such as RSI.
Day traders who like ranges, meaning buying at support and selling at resistance should consider trading the European currencies during the late US session into the Asian session (19:00-07:00GMT).
Day traders who like breakouts and trends should consider trading when Europe comes online to when the Europe moves offline (08:00-17:00GMT). Secondarily, trading Asian currencies (AUD or NZD) during the Asian session may provide some breakouts too as that is the active business day for those home currencies.
If you try to trade breakouts of European currencies during the Asian session, you will likely find it frustrating as those markets tend not to move as much since that is ‘off hours’ for those currencies.
WHAT TIME DOES THE LONDON FOREX MARKET OPEN?
The London forex market hours are from 3:00 AM ET to 12:00 PM ET. The London forex market session sees the most forex volume of all the forex market sessions.
Time in ET
|Overlap with Asia session||3:00 AM – 4:00 AM|
TOP 3 THINGS TO KNOW ABOUT THE LONDON TRADING SESSION
- The London session is fast and active
The slower Tokyo market will lead into the London session, and as prices begin to move from liquidity providers based in the United Kingdom, traders can usually see increases in volatility.
As prices begin to come in from London, the ‘average hourly move’ on many of the major currency pairs will often increase. Below is analysis on EUR/USD based on the time of day. Notice how much greater these moves are, on average, after the Asian session close
- Look out for the overlap
The ‘overlap’ is when the London and US sessions literally overlap each other (8AM ET to 12PM ET). These are the two largest market centers in the world, and during this four-hour period large and fast moves can be seen during the overlap as a large amount of liquidity enters the market.
- High liquidity
The London forex session is one of the most liquid trading sessions. Due to the high volume of buying and selling, major currency pairs can trade at extremely low spreads. Day traders looking to target short moves may be interested in finding trends and breakouts to trade so as to reduce the cost they pay in spread s.
WHAT CURRENCY PAIRS ARE THE BEST TO TRADE DURING THE LONDON SESSION?
There are no ‘best’ currency pairs to trade during London forex market hours, but there are currency pairs that will reduce in spread due to the high volume and allow traders cheaper spread costs.
These currencies include the major currency pairs like EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The major currency pairs trade in extremely high volumes during the London forex session.
Currency pairs that are most affected by the overlap include the EUR/USD, USD/JPY, GBP/USD due to the inter-bank activities between the United States and Europe/London. If your trading strategy is better suited for volatility, then these are the trading pairs to watch because they will be flooded with liquidity and will move more on average during the overlap.
Trading the Tokyo Session:
The Asian trading session is often overlooked as it is not as liquid and volatile as other major trading sessions; but these characteristics are exactly what makes the Asian session attractive to those who know how to trade it.
WHAT ARE THE TOKYO FOREX MARKET HOURS?
The Asian forex session starts off the trading week on a Monday morning at 09:00 and closes at 18:00 in Japanese Standard Time (JST). In London, traders will have to be up at 00:00 (GMT) in the early hours of the morning until 09:00 (GMT) if they wish to follow the Asian session in real time.
Keep in mind that the FX market trades 24 hours a day, so official starting times are subjective. But it is generally accepted that the Asian session begins when Tokyo banks come online due to the volume of trades they facilitate. New Zealand and Sydney, Australia are technically the first, reasonably sized, financial hubs to start the trading day.
TOP 5 THINGS TO KNOW ABOUT THE TOKYO SESSION
The Tokyo forex session is typically known to adhere to key levels of support and resistance due to the lower liquidity and volatility experienced. The Asian session is characterised by:
- Low liquidity
- Low volatility
- Clear entry and exit levels
- Ideal for sound risk management
- Breakout trade opportunities after the close
WHAT CURRENCY PAIRS ARE BEST TO TRADE DURING THE TOKYO SESSION?
The best currency pairs to trade during the Tokyo session will depend on the individual trader and strategy employed. Traders looking for volatility will tend to trade Japanese Yen, Singapore dollar, Australian dollar and New Zealand dollar crosses.
Traders looking for less volatile currencies include non-Asian currencies, mainly: EUR/USD, GBP/USD and EUR/GBP to list a few.
The New York Session:
The New York forex session is one of the most liquid forex trading sessions. When the US session overlaps with the London forex market session it is considered to be the most liquid period of the day.
WHAT TIME DOES THE NEW YORK FOREX SESSION OPEN?
The New York forex session opens at 8:00 AM ET and closes at 5:00 PM ET. The ‘overlap’ occurs when the US Forex session overlaps with the London forex market session. The London Forex market session opens at 3:00 AM ET and closes at 12:00 PM ET, so the overlap occurs between 8:00 AM ET and 12:00 PM ET.
BEST FX PAIRS TO TRADE DURING THE NEW YORK SESSION
The best forex pairs to trade during the New York session would be your majors, like EUR/USD, USD/JPY, GBP/USD, EUR/JPY, GBP/JPY, and USD/CHF. These pairs will be the most liquid during the US session, especially the EUR/USD during the overlap.
Each forex trading session has unique characteristics, the London forex trading session follows the New York session which is then followed by the Asia trading session.
The liquidity will lead to reduced spreads and therefore, lower trading costs. During the overlap, the combination of increased volatility and increased liquidity will be beneficial to most forex traders.