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  5. Forex Trading Sessions: When Is the Best Time to Trade?

Forex Trading Sessions: When Is the Best Time to Trade?

Forex Trading Sessions

The forex market operates according to global trading hours and is open 24 hours daily. We will introduce you to the individual forex sessions and explain when forex trading is particularly promising.

Key facts to consider:

  • The forex market operates during regular business hours in four different parts of the world and their respective time zones.
  • The US/London markets overlap (2 pm to 6 pm), have the most significant trading volume and are best suited for trading opportunities.
  • The Sydney/Tokyo market overlap (8 am to 10 am) is not as volatile as the US/London overlap but still offers opportunities.

What are the main forex centers?

London, New York, Tokyo, and Sydney are the most important centers of the foreign exchange market and, thus, of forex trading. Since these cities are spread worldwide and have different opening hours due to their geographic location, the global forex market is always open.

Forex is traded over the counter. Therefore, there is no centralized foreign exchange market. The banks, brokers, and market makers in the forex centers make forex trading possible worldwide.

Forex trading hours: The opening hours of the foreign exchange market

The forex market is open 24 hours a day, five days a week. The days are divided into several sessions; each session is open for a fixed period depending on the geographical location.

Generally, there are three main Forex trading sessions: Asian, European and North American trading sessions.

The Asian session opens first: In Sydney, trading starts at 22:00 and closes at 07:00 (CET) the next morning. Tokyo, which is also part of the Asian session, opens at 01:00 and closes at 10:00 (CET).

The second session is the European session. London, the largest forex center in the world, opens at 09:00 and closes at 17:00 (CET). The North American session opens last. Trading begins at 1 pm in New York and closes at 10 pm (CET), at the time when the Sydney session reopens.

Weekend trading sessions are from 05:00 on Saturday morning until 21:40 (CET) on Sunday evening.  Any positions open after 21:40 on Sunday will be rolled into weekday positions when the markets reopen twenty minutes later at 22:00.

It is important to remember that trading times may differ in March, April, October, and November as countries switch from winter to summer and back at different times. Also, it must be remembered that although the forex market is always open due to the back-to-back sessions, individual forex sessions are only available for up to 24 hours.

Why are forex market hours important for trading?

Although the forex market operates 24 hours a day, traders should pay particular attention to forex trading hours. The market is more active during specific sessions, and spreads tighten when one region’s sessions overlap with another.

However, the increased activity is mainly confined to currencies traded in both regions of the merging sessions. For example, the currency pair GBP/USD shows a higher trading volume between 13:00 and 17:00 (CET) since both the European and North American sessions are open during this period.

The beginning of each trading session is determined by the actions of large institutions such as investment banks, which usually publish the relevant economic data for the session at this stage. For example, in London, key data is released at 09:30 (CET), followed by US numbers between 12:30 and approximately 15:30 (CET).

The announcements may significantly impact volatility depending on how markets react. Forex traders should therefore know exactly when the data will be released.

What are the best forex trading hours in Europe?

The European forex market is usually active after London opens at 09:00 (CET). At the start of the session, liquidity and volatility will be comparatively high as traders start interacting with each other. Markets are typically less liquid around 11:00 GMT. However, liquidity will pick up again from 13:00 GMT when the North American markets open.

Forex trading during the London session

During the London session, major currency pairs such as GBP/USD or EUR/GBP are particularly popular. This is especially true during the period when the London and New York sessions overlap, and the European session is open. However, the European trading hours are almost identical to the London session.

When the Tokyo and London sessions overlap, activity is typically lower than when the London and New York sessions overlap. This is because the period of overlap between London and New York is greater than the overlap between London and Tokyo.

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