Forex Trading Sessions: The Best Trading Times for You

forex trading times

Have you been interested in trading in the Forex market? Understanding the Forex market sessions and timing can sound complex. However, the right information can make a world of difference when you are trading.

The Forex market is a large financial market where people trade in several sessions. It is interesting to note that there is no stationary center where Forex trading takes place. Instead, people trade over the phone and on Electronic Communication Networks (ECN).

This global network has a market that remains open for 24 hours and begins and ends at specific trading times. It continues from Sunday 5 pm EST to Friday at 4 pm EST. The good news is that at least one market is open at any given time across the world. 

Trading occurs across the world and begins in Australasia. Trading then begins in Europe and then in North America. There are a few trading sessions associated with different areas around the world. Before exploring these sessions, here’s why the Forex market is open for 24 hours a day. 


Why is the Forex Market Open for 24 Hours a Day?

The Forex market operates 24 hours a day largely because the trading sessions are hosted across multiple international time-zones. Further, trading occurs over computers and ECN networks. This makes all markets accessible across the world.

You can trade in a single currency at all times, even after closing time in a given market. For instance, you may hear that the US dollar closed at a given rate. This does not mean that the US dollar cannot be traded in other sessions. It simply means that there was a given rate for the US dollar when the New York Forex market closed. 

Because of this large time flexibility associated with the Forex market, it remains open 24 hours a day. This is different from other securities like domestic stocks and bonds. Because of their nature, the demand for them is not as high across the world.

Hence, they do not require a 24-hour market. On the other hand, the worldwide demand for Forex justifies its 24-hour long market. Further, the Forex market is not just used for trade by individuals, but also banks and governments. For this reason, the demand remains at an all-time high. 


Forex Trading Sessions

A Forex market does remain open for 24 hours, but this does not mean that it will remain active the whole day. Often, this market tends to remain stagnant, and there are often no trades when the market does not move up or down.

To determine the best hours to trade, it is important to know what the 24 hours in the Forex market constitute. There are four main trading sessions. These include the Sydney session, Tokyo session, London Session, and the New York Session.

In the past, the Forex market has had three peak trading sessions. These three trading sessions form what is called the Forex 3-session system. These are the Tokyo Session, London Session, and the New York Session.

Many traders call these same sessions by their continental names. Hence, this translates to the Asian session, European session, and North American session. The trading session begins on Monday in New Zealand with the international dateline. 

From then until Friday, the market does not formally close. Activity reduces substantially between 19:00 and 22:00 GMT as the world begins and ends its days. You should note that the weekends are holidays, and so are Christmas and New Years’ Day.

Read ahead to find out just when to trade Forex in each of these three peak sessions.





When Can You Trade Forex in the Tokyo Session?

The Tokyo session is the mark of liquidity in the Forex market. Despite the trading day beginning much earlier, this is when liquidity shows up in the market. Also called the Asian session, this market is largely associated with Japan, which is the third-largest center for Forex trading in the world.

About 20% of trading volume in the Forex market takes place in the Tokyo session. However, this trading also comes from Hong Kong and Singapore and is hence termed the Asian session.

The Tokyo session opens at 12:00 am GMT, and this is when you can begin trading. In EST, the market stays open between 7:00 pm and 4:00 am. You should note that the bid and ask prices in each market tend to affect the same in other markets. For the Tokyo session, this increases volatility during a particular period. 

This is largely between 7:00 pm to 2:00 am EST when both Tokyo and Sydney exchanges open at the same time. The trading volume is high, and the market moves.

Between 3:00 am and 4:00 am, EST is also a volatile time for a trade. This is when the Tokyo Exchange and the London Exchange remain open at the same time. If you are a long-term trader who uses fundamental analysis, you may want to avoid these volatile sessions of trading.

If you are a day trader and trade multiple times in a day, these volatile timings are a great option for you. Do note that traders often use high leverages during this period. If you are a novice, you want to first explore the market during volatile periods before you begin trading.

When considering the timing in the Asian session, you should also know that this session often extends. This is because it accounts for multiple places of trade in the same session. This can include Australia, China, Russia, and New Zealand.

This means that the beginning and end of the session is often beyond the standard Tokyo session hours. A trader should be mindful of this when trading in the Tokyo session. Since this market is the first to see restored liquidity after a week, it is also where trading volumes first appear. 


When Can You Trade Forex in the London Session? 

The London session is operational, just as the Asian session begins to close. London has been the center of trade in the past. Because of its location in the center of the world and the trading day, the London session enjoys a strategic advantage.

It overlaps with the ending of the Tokyo session. Further, the afternoons of the London session overlaps with the beginning of the New York Session. The two overlaps simply mean that the London session sees a large trading volume and high volatility. 

London has been considered the Forex capital of the world, and the London session is seminal to Forex trade. You can take note that close to 43% of Forex transactions happen in the London session.

As with the Tokyo session, the London session does not simply constitute London. It includes Geneva, Frankfurt, Paris, Luxembourg, and Amsterdam, among other areas. For this reason, the session is also referred to as the European Session.

The London session sees large volatility and relatively low spreads. Hence, many day traders choose to trade in this session. In the afternoon times, volatility tends to come down. This is largely because traders tend to go out for lunchtimes before the New York session begins.

In this session, the major pairs traded are EUR/USD, USD/JPY, and GBP/USD. These currency pairs tend to have the tightest spreads in this market and can be advantageous to traders. These pairs also respond to any news reports that come out during the London session. Hence, traders find it easy to study the market when working with these pairs in the London session. 

This session begins at 7:00 am GMT and closes at 4:00 pm GMT. However, for day traders who thrive in volatile markets, the best times to trade are when sessions overlap. The most volatile and high-volume overlap is the US and London overlap. This occurs between 8:00 am and noon GMT.

There is another overlap that does see trade but not very high volumes of it. This is between 3:00 am GMT, and 4:00 am GMT. During this hour-long overlap, the US traders are usually asleep. Hence, the volume is lower, but it can be a good place for novice traders.

Another great time to trade is at the beginning of the London Forex session. This is precisely the time when traders come together and begin interactions. This boosts volatility and is great for day traders. 


When Can You Trade Forex in the New York Session?

While not as liquid as the London session, the New York Session sees high volumes of trade. Coupled with the London session, this market is extremely volatile and can be a great option for day traders. 

The New York session opens at 8:00 am ET and then closes at 5:00 pm ET. The US session, as it is also known, is known to exhibit some of the common trading behaviors from both the London and Tokyo sessions. For this reason, it is considered an exciting session with good liquidity.

The beginning of this session is the most volatile. The volatility tends to die down as the session progresses. For every level of volatility, there are certain strategies and certain traders that benefit most.

Day traders benefit most from trading during the beginning and volatile part of the session. Market ups and downs can be a key profit point for these traders who depend on technical analysis. 

On the other hand, traders that depend on fundamental analysis may be better suited to trading environments that are less volatile and take notice of larger trends in the economy. These traders may prefer opening trades towards the end of the trading session. 

There is a four-hour overlap between the New York session and the London session. During this period, the liquidity is very high, and you can also gain big rewards for the amount of risk that you take. There will also be low spreads on the currency pairs. It means that traders face lower costs.

Many traders also prefer using their funds during the less volatile periods after the big overlap. This is just before the Asian session begins. During this period, range trading can be a great option. In this case, technical indicators and oscillators are used to mark support and resistance levels.

According to these, traders can either short currency pairs or go long on them. This keeps the New York session fairly active during less volatile periods.

There are a few currency pairs that are appropriate for the New York session. These include the EUR/USD, USD/JPY, and GBP/JPY. Other than this, the GBP/USD is also a great option. These currencies work very well because of their high liquidity.

Any economic news that is heard in New York also tends to affect these currency pairs. Hence, they are a great trading option in the New York session.


What Are the Best Times to Trade Forex?

Now that you know about the three peak sessions that dominate the Forex market, you can map your timing to identify the best times to trade. The right time trade depends on your strategy and the hours you can spend trading. Most traders prefer a volatile market.

The trading week begins on Sunday at 5:00 pm EST and ends on Friday at 5:00 pm EST. Read ahead to find the right timing for your trade during the day and the week.

Best Times in the Day to Trade in Forex

The most volatile periods are the best time to trade. During periods of overlap, the market can move more than 70 Pips, and this may increase if there is important news released. During other times, the movement remains at about 30 Pips.

Look for the following overlaps to make the best trade. 

The London and Tokyo Overlap

This overlap occurs between 3:00 am, and 4:00 am EST and records small Pip movements. This is because it is a small overlap. Nevertheless, the overlap can cause minor volatility, and it is a good time to execute a trade.

The Sydney and Tokyo Overlap

This occurs between 2:00 am, and 4:00 am EST. This is a great time to trade the EUR/JPY currency pair. This is not as volatile as other overlaps but is especially significant for this currency pair as the Asian market is involved.

The New York and London Overlap

This is the largest overlap with the most volatile market. It continues from 8:00 am to noon. About 70% of the Forex trade occurs within this window. This is because trades can be executed against various currency pairs that involve the Euro and the US Dollar. 

These currencies form strong pairs that see high volumes of trade during this overlap window. For traders who enjoy rapid market movements, this is the best time to trade. 


Best Day of the Week to Trade in Forex

The best days to trade in Forex are positioned right in the middle of the week. Here’s why this period is a great option to execute trades.

From the end of the first trading day from Sunday to Monday, the pace of the trade is slow. The range of Pips is also quite low during this period. This is because the weekend holidays are still lingering in some time zones. 

The trading day may have begun in Sydney, but New York is still asleep. The volatility period begins when New York wakes up to its first trading session in the week. However, it is better to let Monday pass too. This is because the economic news for the week is yet to sink in, and traders are often still analyzing the right trends to begin trading.

Tuesday is a great day to execute the trade. This is when the market is highly volatile. On Wednesday, there may be a slight reduction in volatility as traders hold on to their trading positions at the end of the day. Thursday yet again sees an active market due to its high volatility. These three days are excellent days to trade.

On Friday, the first half of the day offers excellent conditions for trading, and activities are high. This is also because of the overlaps between sessions when the EUR/JPY and the GBP/JPY currency pairs remain highly volatile.

The weekend is approaching, and activities tend to die down during the latter part of Friday. Most traders do not open any trades during this part of the day. They choose to simply rest, awaiting the coming trading week.


In Summary

Three peak trading sessions in the Forex market often overlap. These overlapping periods are the most volatile and see a hike in market activity. These are advantageous hours and days for traders who use technical analysis to open and close traders.

For traders who use fundamental analysis, the best trading times are instead guided by major economic and political events in the global environment. They study the economic calendar to look for big events that can cause large movements in Pips. Traders may look at interest rates, trade deficits, and GDP data to pick the best trading times. 

If you are looking for the best trading times for you, either or both kinds of analysis may determine this. You will also have to take account of your geographical location and the currency pairs you are interested in.

Open demo trading accounts with eToro or IC Markets and find out the best times to trade.