One of the most appealing aspects of the Forex market is that it is accessible 24 hours a day, five days a week, providing you with excellent flexibility. But here’s a little something that all smart traders have figured out: not all hours in a day are created equal. Whether there are quieter hours, slow hours, busy hours, or exciting trading hours, there is a market peak during the day where the world is awake, and there is more trading to be done.
The question is, what is the best time to trade forex? Well, the answer is the easiest part; once you know the market’s daily rhythm. This guide will clearly outline the different forex trading hours and sessions, and help you determine the best hours to trade.
The Global Clock: Understanding Forex Trading Sessions
The Foreign Exchange market operates in a global market. It follows the sun around the globe, from one major financial center to the next major financial center. This creates a 24-hour cycle, broken into four major sessions.
To keep everything universal, we are using Greenwich Mean Time (GMT). You can easily convert these to your local time. The approximate session times are below:
- Sydney Session: 10:00 PM to 7:00 AM GMT
- Tokyo (Asian) Session: 12:00 AM to 9:00 AM GMT
- London Session: 8:00 AM to 5:00 PM GMT
- New York Session: 1:00 PM to 10:00 PM GMT
Each session brings its own personality. The Asian Session tends to be quieter. The London session is typically the busiest session to trade. Knowing the forex time zones is the first step to knowing best time to trade in forex.
The Magic of the Forex Time Zone Overlap
Now, We are at the point in trading with the highest activity and volatility. A forex time zone overlap is the windows during which two of these sessions are open together. Traders from two major parts of the world are all trading at the same time. This combination creates a perfect storm for trading.
Here are the reasons the forex trading hours of overlap is when activity is at its peak:
- More Action – with more traders online you have a lot more buyers and sellers.
- Higher Trading Volume – more money moving through the market.
- More Liquidity – it becomes very easy to get in and out right away.
- Bigger Moves in Price – All this activity causes prices to move more giving you more opportunities.
Your most successful trading will begin by focusing your efforts around a forex time zone overlap.
The King of Overlaps: The London-New York Session
There is an overlap that trumps all of the others. It’s the time when the London and New York sessions are both open. This is commonly referred to as ideal times to trade forex.
This magical overlap lasts from about 1:00 PM to 5:00 PM GMT.
This is primetime for the Forex market as its the apex of competition between the two principal financial centers in the world. It has the highest trading volume. The highest liquidity. The biggest moves of the day happen during this time, which is why traders actively trade the London New York overlap..
The Right Broker for the Busiest Hours
If you’re looking to trade during the most active forex hours, during these fast-moving markets, you will need a broker that has a fast and reliable platform. Knowing when the best time to trade forex is only half the challenge, you also need a good broker.
- For instance, brokers like Capitalix and SmartSTP have simple platforms that are easy to use and designed for beginners without any stress.
- You will also need a fast and powerful platform if you’re trading during the overlapping, busy forex time zones. Some brokers like FX Road and Trade EU Global are known to have strong technology to be able to trade through that volume.
- If you’re a serious trader that enjoys trading the overlapping London New York market, you will need professional tools. The platforms of CapPlace and the ECN broker FirstECN provide examples of some of the advanced tools a serious trader would require to be successful.
- The best brokers are also innovative. Their are brokers such as SuxxessFx, Tradgrip and Algobi that are known for their contemporary tools to help you find
When Are the Worst Times to Trade?
As there are good times to trade, there are also market times of inactivity that it’s usually better to stay away from.
- The Afternoon Lull. The time after London opens, but before New York joins (roughly from 9:00 AM to 12:00 PM GMT) can be slow at times.
- Late in the US session. After London closes (after 5:00 PM GMT), volatility often drops until the New York Close.
- Major Bank Holidays. If there is a notable Bank Holiday in the US or UK, the market will be extremely quiet.
Conclusion
You do not have to be “glued” to your screen for 24 hours to be a successful trader. It is actually much smarter of you to work your energy into the times when the market is at its best.
The best time to trade forex is during the session overlaps, specifically the powerful London-New York overlap. If you are planning your trading around these active hours, you are working smarter, not harder.
FAQs
- What is the best time to trade forex?
The best time to trade forex is usually during the overlap between the London and New York sessions, from approximately 1:00 PM to 5:00 PM GMT. This period has the most trading activity.
- What are forex trading sessions?
They are the main business hours of the major financial centers around the world. The four major sessions are Sydney, Tokyo, London, and New York.
- What is a forex time zone overlap?
This is a period when two forex trading sessions are open at the same time. These are the most active forex trading hours because more traders are in the market.
- Why is London New York overlap trading so popular?
It’s popular because it’s the period with the highest trading volume and liquidity. This creates more price movement and more trading opportunities.
- Is it okay to trade during the Asian Session?
Yes, absolutely. The Asian Session (roughly 12:00 AM to 9:00 AM GMT) is a great time to trade, especially for currency pairs involving the Japanese Yen (JPY) and Australian Dollar (AUD). It is generally calmer than the London/New York overlap.