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Yes, it is true that the forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day.

You can make money when the market moves up, and you can even make money when the market moves down. But you will have a very difficult time trying to make money when the market doesn’t move at all. So, it’s about time to learn when is the best time to place an order. 

Forex Trading Sessions

First, here is a brief overview of the four markets (hours in Eastern Standard Time, or EST):

● New York (open 8 a.m. to 5 p.m.): New York is the second-largest forex platform in the world, because the U.S. dollar is involved in 90% of all trades. Movements in the New York Stock Exchange (NYSE) can have an immediate and powerful effect on the dollar. The dollar can gain or lose value instantly once there is any news release such as economic data (NFP, GDP, or PMI, etc.) and outbreak of war, pandemic, or political events.

● Tokyo (open 7 p.m. to 4 a.m.): Tokyo, the first Asian trading center to open, takes in the largest bulk of Asian trading, just ahead of Hong Kong and Singapore. The currency pairs that typically have a fair amount of action are USD/JPY, GBP/CHF, and GBP/JPY. The USD/JPY is an especially good pair to watch when the Tokyo market is the only one open, because the Bank of Japan has heavy influence on the market.

● Sydney (open 5 p.m. to 2 a.m.): Sydney is where the trading day officially begins. While it is the smallest of the mega-markets, it sees a lot of initial action when the markets reopen on Sunday afternoon because individual traders and financial institutions are trying to regroup after the long pause since Friday afternoon.

● London (open 3 a.m. to noon): The U.K. dominates the currency markets worldwide, and London is its main component. London, a central trading capital of the world, accounts for roughly 43% of global trading, according to a report by BIS. The city also has a big impact on currency fluctuations because the Bank of England, which sets interest rates and controls the monetary policy of the GBP.  Forex trends often originate in London as well, which is a great thing for technical traders to keep in mind.

The Best Hours for Forex Trading

The best time to trade is during overlaps in trading times between open markets. Overlapping sessions produce more volatilities, resulting in greater opportunities. Here is a closer look at the three overlaps that happen each day. For example, during the summer, from 3:00-4:00 am EDT, the Tokyo session and London session overlap, and during both summer and winter from 8:00 am-12:00 pm ET, the London session and the New York session overlap. Naturally, these are the busiest times during the trading day because more trades would be made when two markets are open at the same time.

● U.S./London (8 a.m. to noon): The heaviest overlap within the markets occurs in the U.S./London markets. More than 70% of all trades happen during this period because the U.S. dollar and the euro are the two most popular currencies to trade. This is the most optimal time to trade since volatility is high.

● Sydney/Tokyo (2 a.m. to 4 a.m.): This time period is not as volatile as the U.S./London overlap, but it still offers a chance to trade in a period of higher pip fluctuation. EUR/JPY is the ideal currency pair to aim for, as these are the two main currencies influenced.

● London/Tokyo (3 a.m. to 4 a.m.): This overlap sees the least amount of action of the three because most U.S.-based traders won't be awake at this time), and the one-hour overlap gives little opportunity to watch large pip changes occur.