The Best Hours for Trading Forex

Ali Qamar

Updated: 16 November 2023

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Most-profitable Hours for Forex Trading

The forex market at its most active levels is the optimal time for trading forex. Traders monitor various releases of data for decisions to trade all day. The forex market trades 24-hours a day and five days a week alongside running across four multiple parts of the globe, each with a different time zone. Therefore, trading on the forex market lasts day and night.

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So, what do you need to get the maximum from the forex market?

Any trader needs to have a clear understanding of all the market hours and then set appropriate goals to ensure a maximum gain. This article will provide everything you need to know about the best hours for trading forex.

The Major Forex Exchanges

The forex market has mainly four major exchanges which are located in London, New York, Tokyo, and Singapore. When two or more exchanges are simultaneously open, the trading volume is increased as well as spikes volatility hence benefiting traders.

As much as it may seem confusing as most investors fear the market volatility, but in forex, higher volatility reflects some more excellent payoff opportunities.

Worldwide Market Hours

The forex exchanges are open weekly Monday-Friday with each having unique trading hours. The four significant windows include as follows (hours I Eastern Standard Time);

London (3 am to 12 pm) – The UK exchange dominates the market across the globe with London being the main component. According to the IFS London report, it accounts for about 34% of global trading.
New York (8 am to 5 pm) – being the 2nd largest platform across the globe, the foreign investors heavily watch the New York market as the US dollar is represented in almost 90% of the trades.
Tokyo (open 7 pm to 4 am) – Tokyo is the first trading in Asia t open and takes the most of Asian trading ahead of Singapore and Hong Kong. The bank of Japan has a substantial influence over the market, making the USD/JPY a good pair, especially when most markets are closed, leaving the Tokyo market alone open.
Sydney (5 pm to 2 am) – Trading officially begins from the Sydney market. As much as it can be the smallest of all, there’s a lot of initial action when reopening on Sunday as most traders want to get into the market after a pause from Friday.

Best Hours for Trading Forex

Basically, in forex trading, the week commences at 6 pm on Sunday through to 5 pm on Friday. However, not all the hours are the best to trade, as we already mentioned that the best time is when the market is active the most.

When one market is only open, the currency pairs appear to be locked in some tight pip spread maybe 30 pips of movements. However, with two markets simultaneously open, there can be an upward movement to say 70 pips, and with big news released, the market gets even better.

The Overlaps in Trading Times

During overlaps also is another best time of trading. Overlaps usually equal higher prices that result in more significant opportunities. For instance,

The US/London (8 am to 12 pm) – The US/London markets represent the most massive overlap with over 70% trades happening during this overlap. The reason being, the dollar, and the euro are the dominant currencies for trade.
Sydney/Tokyo (2 am to 4 am) – This overlap also offers a period of some higher pip fluctuation. At this period, the ideal currency pair to go for is the EUR/JPY as they are the significant currencies influenced.
London/Tokyo (3 am to 4 am) – it’s an overlap that has the least of action as time is not ideal for the US-based traders. One hour overlap isn’t the best time; hence, it gives a little opportunity.

News Releases and their Impact of the Forex Markets

Understanding the best hours of trading is a step to profitability. However, release news is equally significant in forex trading. A considerable news release can enhance a slow trading period as the currency can either gain or lose value instantly.

Nevertheless, not all news release has significant impacts on the forex markets. Some of the most considerable news releases include; trade deficits, GDP data, CPI data, central bank meetings, and consumer confidence.

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Conclusion

Whenever you’re setting up your trading schedule, it’s essential to consider and make the most out of the market overlaps as well as not forgetting to check on the news releases. It’s the best way to enhance profits which will then increase trading confidence. Understand the best trading hours and ensure you don’t miss an opportunity by closing your eyes.

The Best Hours for Trading Forex

Ali Qamar

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