When is the best time to trade forex? Unlike other markets, the foreign exchange or forex market is open 24 hours a day from Monday to Friday. This is a consequence of the fact that it is a decentralized market.
Forex Market Hours, When is it best to trade?
In this article, you will learn at what times the different financial markets are open and which currencies are the most interesting to trade according to the Forex schedule.
What are the Forex trading hours?
The Forex market opens its doors on Sunday at 22:00 GMT time (which coincides with 23:00 Spanish time).
The market closes on Friday at 21:00 GMT (22:00 in Spain).
During all this time it is possible to trade, as the schedules of the different financial markets overlap. On each trading day we can distinguish three clearly defined sessions.
The sessions of the foreign exchange market
The foreign exchange market, also called Forex (from Foreign Exchange), is the largest and oldest market in existence. It is not a single trading venue, as is the case with stock exchanges. For this reason, it is called a decentralized market.
It includes a wide range of participants, from central banks, financial institutions and corporate clients to brokers and traders of all kinds.
Any currency can be traded at any time, as there is an open place to trade at any time, depending on the different time zones of the world (though, as we will see, there are more suitable times for certain currency pairs than others).
In other words: When some markets in the world are closed, others remain open. For this reason, currency trading is open from Monday to Friday, 24 hours a day.
The most active financial markets are:
- New York
Finally, on weekends, the foreign exchange market is inactive as all markets are closed then.
The Asian session opens at 22:00 (GMT) on Sunday (the opening of the week in the foreign exchange market). Sydney is the first market to open, but it overlaps with Tokyo (at 00:00 GMT), and the latter sets the pace of trading.
This session is not very suitable for intraday trading for traders in Europe, as it takes place in the middle of the night (between 23:00 and 08:00 GMT).
However, the last leg of the Asian trading day overlaps with the opening of the European trading venues.
The most traded currencies during Asian trading are:
Japanese yen: JPY.
Australian dollar: AUD.
So, these are the most volatile currency pairs you can find during this time:
This is the most important session due to the high volume of trading. This is due to the fact that the most important trading center in the world, London, remains open.
One hour before the London market opens, the Frankfurt market opens (at 07:00 GMT) and thus overlaps with the Asian market in the first two trading hours.
The London market opens at 08:00 GMT and overlaps with the Tokyo market until 09:00 GMT.
The euro (EUR) is starting to pick up and is the most active currency along with the pound sterling (GBP) and the US dollar (USD).
The European session is electrifying. While a currency pair is generally considered volatile when it moves more than 80 pips, GBP/JPY and GBP/CHF can move up to 140 pips during the European session.
In contrast, the NZD/USD, AUD/USD and AUD/JPY currency pairs move by 50 pips on average. They are the least active in this session.
The European session ends at 16:00 GMT, a key forex trading time, as London closes at that time. Frankfurt closes an hour earlier.
The American session is also one of the most important, as New York is one of the largest trading centers (after London).
In fact, London and New York overlap from 13:00 (GMT), the time when the American trading day begins. Both remain open until the London close (16:00 GMT).
In this way, the hours when Europe and the United States overlap remain the most volatile, liquid and active.
During the American session, the most active currencies are the US dollar (USD), the pound sterling (GBP) and the euro (EUR).
Interestingly, the GBP/JPY currency pair is very volatile during this session. This is because its change is caused by the inverse correlations between the GBP/USD and USD pairs.