Forex trading is one of the most profitable methods to invest your money in the financial market. However, to identify the right opportunities, a trader must have knowledge of the right time to place a trade. In this article, we will learn about forex market opening, closing and overlapping time to help you in making effective trade decisions.
Introduction to Forex Market
The foreign exchange market is the largest financial market where traders buy and sell currencies in order to take advantage of currency rate fluctuations.
According to information, the market offers more than 180 legal currencies to trade in. However, most of the transactions take place in major currencies like US Dollars, Japanese Yen, British Pound, etc.
One of the key features of the FX market is its decentralized nature. The most common question of beginners is who controls the currency market. However, no central authority or location regulates the activities of currency trading.
The central banks or governments of respective countries may form policies that may influence the working of the market. However, no authorities or government has direct control over the market.
Currency trading is a way to invest your money in a financially sound country. Suppose a person feels that Japan is doing really well in terms of technological development, and it will positively impact its currency.
In this case, he will buy Japanese Yen against any other currency. So when there is an increase in Yen value against that currency, he can make a profit. However, if his prediction goes wrong, he will lose the money.
Forex market sessions
The foreign exchange market is open 24 hours and five days a week. It is an over-the-counter (OTC) market, which means you can trade anytime from anywhere using electronic or digital mediums.
However, it does not mean that you should trade anytime. Time is the most essential and crucial factor to consider in order to make maximum money while trading in currencies.
According to data, more than 90% of traders lose money in currency trading, and the reason is a lack of proper planning. A trader should have knowledge of forex market opening & closing times based on different sessions.
Forex Market has four important sessions, including the London session, the New York session, the Tokyo session and the Sydney session. Each trading session has a different time & significance.
The FX market is known as the 24/5 market because, at any point in time, at least one session remains open. You can trade in any session, irrespective of your location.
Let us briefly study Forex market timing in GMT & EST with the main features of each session to help you decide the best trading session to trade based on your needs.
Sydney Session: Best for AUD & NZD Traders
. 3 pm to 12 am EST
. 9 pm to 7 am GMT
Sydney session is commonly known as the Asia Pacific Session. In the forex market, traders should trade during the high volatility periods when most traders are active. However, it is the least volatile session, but it can be suitable for people dealing in AUD/USD, NZD/USD, AUD/NZD, AUD/JPY, etc.
During this period, Significant data from countries like Australia and New Zealand were released. So it offers excellent market conditions to trade in these currencies.
London/ European Session: Best for trading in currency pairs
. 3 am to 12 noon EST
. 8 am to 6:00 pm GMT
European Session is the most extensive trading session with high volatility and liquidity rate. As per information, more than 35% of the total transactions take place in this session.
During the London session forex times, major economic events and announcements take place, which attracts a large number of traders from all over the world.
Also, the session overlaps with the London and Asian session, which make it suitable for traders trading in different currency pairs. During this session, you can trade in currency pairs like EUR/USD, GBP/USD, EUR/GBP, EUR/JPY, etc.
New York Session: Great Liquidity & Volatility
. 8 am to 5 pm EST,
. 1 pm to 11 pm GMT
The New York session is considered the best session to trade in currencies due to high liquidity & volatility. According to information, more than 78% of transactions occur in United States dollars. USD is the strongest currency that dominates the forex market.
You can trade in any major currency pairs, including EUR/USD, USD/CHF, AUD/USD, USD/CAD, GBP/USD, USD/JPY, and USD/CHF. EUR/USD is the most profitable and stable pair to trade during this session.
Tokyo Session: Best for trading in Asian Currencies
. 7 pm to 4 am EST
. 11 pm to 9 am GMT
As compared to American and European Sessions, Tokyo Sessions offer low volatility and liquidity. However, it is the best session for trading in strong Asian currencies.
Traders from major countries like Japan, China, South Korea, Vietnam, Singapore, and Russia are active during this period. In the Tokyo Session, you can trade in currency pairs like AUD/JPY, NZD/JPY, USD/JPY, and EUR/JPY.
Best Time to Trade in Currencies
We have discussed the forex market opening & closing time. However, the best time to trade in currencies is when two trading sessions overlap.
Overlap means when two sessions open simultaneously or when the forex trading session times match. At that time, the traders from both sessions are active, which results in high volatility.
The best time for traders trading in major currency pairs is when London & New York Sessions overlap. For Trading in Asian currencies, the best time is during the Tokyo and Sydney session overlap.
Forex Session Overlap Duration
• New York & London session: 1:00 pm to 5:00 pm GMT
• London & Tokyo Session: 8:00 am to 10:00 am GMT
• Sydney & Tokyo session: 1:00 am to 7:00 am GMT
Trading in currencies requires market knowledge, research and analytical skills. Many financial services provide education and training resources for beginners to master trading.
You can start trading with any currency pair. However, not all pairs are profitable; you may incur a loss if you do not select an adequate pair.
The time frame of the currency pair you are trading plays a significant role in your success or failure. Therefore knowledge of forex session timing and famous pair to trade during the session is necessary to make the right trade decisions.
Also, keeping an eye on forex market hours will help you identify the key economic events and announcements that may significantly impact trading. One can use the Forex time zone to determine the local timing of all four sessions.
Angela Spearman is a journalist at EzineMark who enjoys writing about the latest trending technology and business news.