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Forex Market Hours – Forex Trading Sessions

Jan 29, 2021

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For international trade, global businesses, central banks, and the international market, the currency is a global necessity. Hence, it requires a 24-hour market to satisfy and meet the transaction needs for different time zones.

The foreign exchange market is always busy all around the clock. This is because traders are always carrying out one transaction based on their time zone and their trading hours/market hours.

In this guide to forex trading sessions, you will learn about the different forex market hours, and the knowledge will come in handy while deciding on the best/ riskiest time to conduct trades.

 

Why is the Forex Market Open 24 hours a Day?

Forex trades can happen anywhere and not at one central location. Therefore, the forex market has to be open 24 hours a day. Forex trading is carried out by different institutions and dealers, especially big banks. Retail traders then carry out a smaller portion.

They carry out this trade using electronic communication networks in different locations around the world by different players.

Although forex trading is done over the counter, stock trading is done through physical exchanges. This makes traders stick to the operating hours/time of the exchange. The end of one region’s business hours marks the beginning of business in another region. Basically, the market is always open to give room for forex to be continuously traded until the weekend.

The market is open 24 hours a day and 5 days a week, but that does not mean high trade at each hour.

 There is a time known as high liquidity when trading is most favorable over the week. Other times that are not liquid are not favorable for traders.

Within those 24 hours, traders prefer to trade the market during those times of high liquidity in their own country and time zone like the New York session, London session, and Asian session and at times of overlap because, at those times, spread (bids) will be lower with higher volatility.

Also, in those 24 hours, the overlap time is usually from 8 to 12 pm est. The London session and New York session overlap or 3:00-4:00 AM est when the Tokyo session and London session overlap, causing an increase in liquidity and volatility. The London-New York overlap occurs more frequently.

 

Understanding Forex Market Hours

Forex market hours have been a tough one for traders in the global market because the foreign exchange market liquidity flows differently during the different sessions of the market.

Forex market operates in different time zones and can be accessed at different times except during the weekend break. The markets consist of the international currency market made up of banks, commercial companies, central banks, hedge funds, retail forex brokers, investment management firms, and other investors worldwide.

Furthermore, international currency markets involve a global network of exchanges and brokers around the world.

The first thing to understand about trading hours is that it is based on when trading is open in different participating countries despite the times of overlap.

Generally, the two busiest time zones are known to be the London and New York times zones. These two time zones overlap during London afternoon and New York morning. These times are always known to be busy, accounting for most trades in the $6 trillion a day market.

The seven most traded currencies in the world are the US dollar, the Euro, the Japanese yen, the British pound, the Australian dollar, the Canadian dollar, and the New Zealand dollar.

Between the seven currencies, speculators and institutional traders can trade from any country in the world.

This trading favors time with heavier volumes providing forex brokers with higher spreads (bids), reducing their transaction costs.

For institutional traders, they can accept wider spreads if the opportunity to trade early comes from information.

Here are the generally accepted time zones for each region. They are also the forex market hours for each time zone.

  • Spring /summer in the US
  • New York 08 00 am to 5 pm est (1 pm to 10 pm UTC)
  • Tokyo 7 pm to 4 am EST.
  • Tokyo (12 am to 9 am UTC)
  • Sydney 5 pm to 2 am EST.
  • Sydney (10 pm to 7 am UTC)
  • London 3 am to  12 pm EST (8 pm to 5 am UTC)

 

Guide to Forex Trading Sessions

Having established that even though the forex market is open 24 hours a day, all times are not favorable for trading. We will analyze and give a complete guide to what market trading sessions look like and make the best trade.

The four major trading sessions are

  • London
  • New York
  • Sydney
  • Tokyo

The minor sessions are

  • Wellington
  • Frankfurt
  • Hong Kong
  • Singapore

The 24 hour market trading time has many advantages to institutional traders, especially as it pertains to liquidity is not void of pitfalls.

A trader has to be vigilant and well equipped with the knowledge of when the market is high in volatility to decide what times best soothe their trading strategy and styles.

In the forex market, the sessions are divided into Asian, European, and North American sessions. These are the times when activities are at their peak. These three sessions are commonly known as Tokyo, London, and New York sessions.

The market is usually very active when these three regions are running transactions and conducting business, as most banks and corporations carry out their daily transactions.

Let’s take a look at three popular trading sessions.

 

The Asian, or Tokyo, Trading sessions

The forex market can start in this particular trading session because whenever liquidity is restored to the Forex market after the weekend. Asian markets are the first to observe actions always.

The Tokyo capital markets live between 00:00-06:00 GMT, representing activities in this region.

Other countries with considerable pull are also present at this point. Some of the countries are Australia, China, New Zealand, and Russia.

To allow for the different market activities in this region, Asian trading hours run between 23:00 to 8:00 GMT. This is because those markets are scattered.

 

The European, or London Trading Session

When the Asian trading hours are coming to an end, the European session takes over the currency market, keeping it active. In this region, London is the country that represents activities and also defines the parameters for this session.

The Forex time here can be considered to be very dense as it involves key financial markets. The European Forex trading hours GMT run between 07:00-16:00 GMT. Normally the London hours are 7:30-15:30 GMT.

However, the trading period is extended due to other capital markets before the UK’s official open, thereby pushing back the trading session as volatility holds until London closes.

 

The North American, or New York, Trading session

The North American session comes online several hours after the Asian session has already been closed. This Western session is majorly influenced by United states activities and a few contributions from Canada, Mexico, and other countries in South America. The New York activity and the North American

Forex market hours GMT sessions mark for high volatility and make room for great trades.

The North American hours start noon officially at 12:00 GMT. This can be explained by the early financial futures, commodity trading, and the obvious concentration of economic releases.

With a good gap between the close of United state markets and the open of the Asian forex market, an interval in liquidity establishes at the close of the New York exchange trading at 20:00 GMT, as the North American session comes to a close

 

What Is The Best Time to Trade on The Forex Market?

Image 5 The best time to trade forex

Though forex markets run 24 hours a day and 5 days a week, it is important to understand its flow.

Getting to know the ebb and flow of the market will help traders time their trades correctly. For both day traders and trend traders, understanding the time to trade is very important.

While day traders depend on the volatility and liquidity in the market, the trend traders need to predict their entry and exit time correctly to get the best out of their trade.

It is best to trade the forex market when trading spreads. At this time, the differences between bid prices and ask prices tend to narrow. Also, more money goes to the traders, while less money goes to the market makers.

There is a need for traders to commit the hours of the location of the four major forex exchanges (London, New York, Sydney, and Tokyo)to memory. They should also pay attention to the hours or periods when there is overlap between the two exchanges.

Please note that trading volumes and volatility can increase when more than one exchange opens at once. While investors fear market volatility, it still doesn’t change the fact that greater volatility gives rise to greater opportunities for the payoff; hence, the need to get the hang of how volatility works.

 

Risky Market Hours for Trading

Image 6 Risky market hours for forex trading

Every business has a particular risk associated with it. It is generally believed that business people who are risk-takers usually get very successful.

In the forex market, risk-taking can be very dicey and needs every bit of professionalism. Placing trades outside regular exchange hours can be a great risk.

These extended trading hours, however, offer investors the opportunity to act quickly on news and events that occur when the exchange is closed, therefore, making it an excellent indicator for predicting the open market.

One interesting thing about the extended trading hours is that it occurs around the regular trading hours. If major news comes up before the exchange opens or closes, it can increase trading volume.

However, volumes tend to be much lower in the extended hours than the normal open hours. There are several inherent risks associated with trading after the market is closed. They are:

• There will be limited liquidity. There is less volume at these extended hours, making it difficult for traders to execute or make trades.

• There will be large spreads. This is usually caused by fewer trading volumes, which occurs in the extended trading hours. At these times, executing trades at good prices is always difficult.

• There will be an increase in volatility. At these times, prices can change drastically in a short time. This is also due to fewer trading volumes.

• Changes in prices. You might experience uncertainty in price because prices outside the regular stock hours or period may not match the price in the regular hours.

• You will experience high professional competition. Most people who trade at these extended hours or periods are institutional investors, such as mutual funds and more access to money or resources.

 

The Best Market Hours for Trading

There are some hours of the day which are not favorable for trading. It is always best to trade when the market is very active.

The week begins at 5 pm EST on Sunday and runs until 5 pm on Friday. Having this in mind, ensure that you trade when more than one of the four markets are open simultaneously.

At this point, there is an increased trading atmosphere and also significant fluctuations in currency pairs.

 

Forex Market Hours FAQ

 

Which Forex Market is Open Now?

Forex market is open 24 hours a day, so you will help us determine if your market is open following your time zone.

Sydney open – 7 am

Sydney closes at 4 00 pm.

Tokyo opens 9 00 am

Tokyo closes at 6 00 pm.

London opens at 8 00 am

London closes 4 00pm

New York opens 8 00 am

New York close 00 pm

 

What Time Does The Forex Market Open?

The forex market is always open 24 hours a day in various parts of the world. The market opens from 5 pm EST on Sunday and runs through 4 pm EST on Friday.

The main point is not when the market opens, but when the market is most active.

 

Is Forex Closed Today?

Forex is said to open 24 hours a day, so the forex market closing over the weekends has always been a misconception.

This is because there are always 24 hours of forex trading a day. Please note that the forex market never truly closes; it only closes to retail traders.

Many markets in some foreign countries close when North American markets open. Nevertheless, trading in foreign currencies still takes place.

The United States forex market closes at 5 pm EST.

Note that the market is only closed to retail traders. A retail trader buys or sells from his or her account and not for another company or organization.

For you to be considered a retail trader, you must make a trade from your account. Aside from institutional traders, other traders are retail traders.

So for central banks and other local organizations, trading does not close as they can also trade and make investments during the weekend when the market is closed.

So the forex market is only closed during the weekend and on major holidays like Christmas and New year. On these major days and holidays, trades do not occur, and no investment is made.

 

What Forex Market is Open Now?

As a trader, knowing when a particular forex market is open and knowing the time or hour to trade and the trading day will greatly boost your financial status as it pertains to forex.

Sydney opens at 7:00 am

Sydney closes at 4:00 pm.

Tokyo opens at 9: am

Tokyo closes at 6:00 pm.

London opens at 08 00 am

London closes at 4:00 pm.

New York opens 8 00 am

These are standard times. Traders should take note of these trading sessions for foreign exchange. It would help if you also tried to find the trading day for each time zone and country.

 

What Time Does The Forex Market Open and Close?

Forex opens from 5 pm EST on Sunday and runs through to 4 pm EST on Friday in different parts of the world. Keep in mind that one market is open for forex trading at every point in time, and there are few hours of overlap (London New York) between one region’s market closing and another opening.

What this means, according to the International scope of currency, is that there are always traders across the world who are making and meeting demands for a particular currency following their forex trading hours.

 

Conclusion

Forex trading is a sure way to become financially stable. You can only attain this financial stability by learning the ebbs and flow of forex trading.

Ensure that you study the trading days and trading hours in your country and globally. This will help you know when to trade and make great profits.

He who fails to plan plans to fail fits so well into forex trading. With careful planning and strategizing, you will make great profits. Remember the major trading zones, Sydney, New York, Tokyo, and London, and work accordingly.

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