Lesson 5 – When can you trade Forex?
Unlike the worlds stock markets, the forex market is open 24 hours a day on weekdays. This provides us traders with a large window of trading time to find profitable trades, which can be both good and bad.
Many new traders get stuck to their screen while learning the ropes. Searching for any small advantage they can find, trying to discover everything possible by entering in hundreds of trade a day.
While this could be a profitable strategy, it is highly unrecommended as it is very likely youll suffer burnout and therefore it won’t work for you in the long term.
As with anything in life, its best to approach trading with the quality over quantity mindset.
That said, the forex appeal is the 24 hour opening time and the flexibility that provides. No matter where you are on earth, if you have an internet connection, you can trade currencies at any time in the day. Which can not be said for other markets like stocks, bonds or commodities.
Forex Market Opening Hours
As mentioned, the forex markets are open 24 hours a day, 5 days a week.
However, there are 4 main trading centers around the world which are: London, New York, Sydney, and Tokyo. The time zone diversity of these cities is what makes forex a 24-hour business.
Each of the 4 regions has their official hours. It’s important to know them as they affect the volume traded in the most relevant currencies and therefore the volatility of their prices.
Here’s a quick overview of each markets opening times in GMT (Greenwich Mean Time).
- London: 0800 – 1700
- New York: 1300 – 2200
- Sydney: 2200 – 0700
- Tokyo: 0000 – 0900
Do note that these can vary due to daylight savings time.
Forex Market Trading Sessions
As you may have interpreted from the times listed above, the overlaps between each market being open causes the 24 hour tradablility. However, all 24 hours in a day are not created equal.
When it comes to trading, it is vital to take volatility into account. This is what traders thrive on as it means the price is moving around alot. Thus, this created the opportunity to make profitable trades when the price moves up or down aggressively.
Each of the market opening hours signifies the start of a new trading session. During the official hours of these markets, there is a good amount of trading volume and volatility in the currencies associated with each region.
These are the currencies most related to each region and trading centre.
- London: UK & Europe, British Pound (GBP), Euro (EUR), Swiss Franc (CHF)
- New York: US & Canada, US Dollar (USD), Canadian Dollar (CAD)
- Sydney: Oceania, Australian Dollar (AUD), New Zealand Dollar (NZD)
- Tokyo: Japan (Japanese Yen)
When is the best time to trade forex?
The prime hours of forex trading is generally between 1300 and 1700 GMT.
The consensus is that this is the best time of the day to trade foreign markets as this is when the main 5 currencies of the world are being traded actively covering the Americas and Europe.
As mentioned previously, when there is more activity (trading volume), there is more volatility which provides a higher number of trading opportunities as well as these opportunities aving larger price fluctuations.
And each of them present a possibility to make a profitable trade.
Furthermore, the hottest hour of any day is when each trading session starts, usually the New York opening at 1300 has the most volatility. This is when the traders are all scrambling, making trades based upon findings from when the market was still closed.