Many people wonder whether timing affects trading. The fact is that it does to a great extent. The global forex trade takes place 24 hours a day and 5 days a week, starting from Sunday Evening (10 PM UTC) to Friday evening (10 PM UTC). Every trading hour will not bring you opportunities. If you can find out the best time to trade forex, you can increase your profitability and reduce risk.
Forex Market Operation Hours
This time frame for forex trading is divided into four main sessions, which are named after their main financial centers: Tokyo for the Asian region, London for the European region, New York for the North American region, and Sydney for the Australian region. Because of time zone differences, some sessions overlap. The best time to trade forex to gain the most is during the time global sessions overlap. It’s the time when market activity is at its highest and so is the liquidity, as banks and other financial centers open at the same time.
❇️ London Trading Session
Trading hours for London are from 8:00 AM to 17:00 PM GMT winter time and from 7:00 AM to 16:00 PM GMT summer time. This session involves 35 to 40% of everyday forex volume. As its location is between the Asian and American markets, more traders opt to trade during this session. It has the highest liquidity and volume, which sets the trend of the day. You will notice many actions with the European currencies, such as the GBP, EUR, and CHF. The Central Bank and Bank of England announcements have a great impact on trading activities. This session is ideal for day traders who are looking for quick profit.
❇️ New York Trading Session
Trading hours for New York are 13:00 PM to 22:00 PM GMT in winter time and 12:00 PM to 9:00 PM GMT in summer time. There is significant volume and increased volatility, particularly when paired with London. Currency pairs that include the U.S dollars experience high activity. Major U.S economic news is released during this session. You can gain short-term opportunities from the volatility in the market; however, you must be careful to manage your risks.
❇️ Tokyo Trading Session
Trading hours for Tokyo are 12:00 AM to 9:00 AM GMT. This session drives the weekly movement and has higher volatility for AUD/JPY pairs. Compared to the London and New York sessions, the Tokyo session has lower volatility. You can spot the emerging trends in this session to predict trading opportunities. News releases from the Bank of Japan and other Asian economies can greatly affect the price fluctuations.
❇️ Sydney Trading Session
Trading hours for Sydney are 22:00 PM to 7:00 AM GMT. This session sets the tone for the beginning of the week. It influences the Asia-Pacific currencies like AUD, NZD, and others. The Sydney trading session is suitable for traders who are looking for gradual price movements. News from Austria and New Zealand can impact the price action during this time. You can spot early trends and market sentiment to help you trade during the more active periods.
Best Time To Trade: Overlaps In The Forex Trading Times
The overlaps between these sessions offer the best time to trade forex. So, knowing these sessions will help you to trade better and increase your chances of making profits
✳️ London and New York Overlap (GMT 13:00 PM to 17:00 PM)
It is the best time to trade for EUR/USD, USD/CHF, and GBP/USD currency pairs. About 58% of all forex trades occur in these markets. During this time, the main economic reports from the US and Europe are released, which result in clear trends and strong price fluctuations. So, it results in maximum volatility and liquidity. It is the best time for day traders and others looking for high volatility conditions.
✳️ Tokyo and London Overlap (GMT 8:00 AM to 9:00 AM)
You will notice increased overlap during this period. It’s the best time to trade for currency pairs that include the Japanese Yen (JPY), EUR, and GBP. Though this period is less liquid compared to the London/New York overlap, it has greater volatility and volume and offers a great opportunity for short-term trading.
✳️ The Sydney and Tokyo Overlap (12 AM to 7 AM GMT)
It offers less volatility but still provides trading opportunities. You will get a chance to trade during higher fluctuations. You should aim for the EUR/JPY pair. It offers great chances to traders who are experts in Asian currencies.
To get the most outcome from the Forex market, you must focus on the currency pairs that are most actively traded during periods that offer high liquidity and volatility, like the London/New York overlap sessions. You should stay informed about the latest economic news. Economic news can affect forex trading. It can stir up even a slow trading period. If economic news is released that is different than what was predicted, currency fluctuation can occur quickly. Lots of news is released every day, so it’s impossible to keep track of all of it. As a forex trader, you should prioritize news releases.
You must identify market trends using various technical analysis tools. If you trade in the direction of trade, then your chance of making profits will increase. Your trading style is also an important factor to consider. If you like high-frequency and short-term trading, then you should look for sessions with high liquidity and volatility. The day traders should consider periods when economic news is released. The swing traders should focus on less volatile sessions and depend on technical indicators for trading.
Conclusion
You should know how to manage risks. Set up stop-loss orders to protect your capital. Size your positions properly according to your account balance and risk tolerance. If you are a beginner, you should start with a demo account before going into the actual trade. You also should stay updated with trends and news to improve your forex trading skills.
