Forex market opening hours: best time to trade FX
Forex market hours are derived from different geographical trading sessions, meaning you can trade forex around the clock. Here, we explain the different forex market opening times, and the best times to trade forex.
What are the major forex centres?
The major forex centres around the world are London, New York, Tokyo and Sydney, and it is the different locations of these major centres around the world that makes forex a 24-hour market. Forex is an over-the-counter market, meaning that there is no centralised forex exchange. Instead, banks, brokers and market makers in the major forex centres around the world make forex trading possible.
Forex trading hours: the opening times of the forex market
The forex market is open 24 hours a day, five days a week. However, each day is broken up into several sessions, with each session being open for a set number of hours depending on the geographic location. With IG Bank, our weekday forex market is open from 10pm on a Sunday until 11pm on a Friday (Swiss time).
However, while trading on the forex market is usually closed over the weekend, IG Bank offers weekend trading on the GBP/USD currency pair. This means you never need to miss an opportunity to trade, as well as enabling you to hedge your weekday GBP/USD positions with a weekend trade on the same market.
Our weekend forex trading hours run from 5am Saturday to 9.40pm Sunday (Swiss time). Any positions left open past 9.40pm (Swiss time) on a Sunday will roll over into weekday positions when those markets resume 20 minutes later at 10pm (Swiss time).
Broadly speaking, there are three main sessions to trade forex: the Asia-Pacific session, the Europe session and the US session. The first of these to open is the Asia-Pacific session, with Sydney opening at 10pm (Swiss time) and closing at 7am (Swiss time) the following morning. Tokyo – also part of the Asia-Pacific session – opens at 1am (Swiss time) and closes at 10am (Swiss time).
The next session to open is Europe, with London – the largest forex centre in the world – opening at 9am (Swiss time) and closing at 5pm (Swiss time). The US is the last session to open and to close, with trading in New York starting at 1pm (Swiss time) and closing at 10pm (Swiss time), at which point the Sydney session opens again.
It is important to remember that forex trading hours can vary in March, April, October and November, as countries shift to and from daylight savings or summer times on different days. They should also bear in mind, that no single forex trading session is open 24 hours on its own but rather, the forex market itself is open 24 hours because of the different sessions during which trades can be made.
Why are the forex market’s trading times important?
The forex market’s trading times are important because, although it is open 24 hours a day, the market is more active during different sessions, or when there is a crossover between two sessions in different geographic locations, which means that spreads are tighter. However, this increased activity is typically confined to currencies that are found in both locations of a crossover – for example, GBP/USD experiences greater trading volume when both the European and US sessions are open between 1pm and 5pm (Swiss time).
The beginning of each trading session is when the big institutions such as investment banks are active, and this is often when relevant economic data for each session is published. For example, the UK’s major data releases come out at 9.30am (Swiss time), while the US tends to publish its numbers from 12.30pm, until about 3.30pm (Swiss time).
These announcements can generate significant volatility depending on the market reaction, so every forex trader needs to know when they are published.
When is the best time to trade forex?
Typically, the UK forex market is most active just after the open of the London session at 9am (Swiss time). At this time, liquidity and volatility will likely be high as traders begin interacting with each other. Trading will usually become less liquid at around 11am (Swiss time), and it will pick up again after the American markets open at around 1pm (Swiss time).
Trading forex during the London session
Popular forex pairs to trade during the London session are the majors such as the GBP/USD cross or the EUR/GBP cross. This is especially true during the overlap between the London and New York markets, as well as the European session which is open during almost identical hours to the London session.
The Tokyo-London crossover is historically not as busy as the London-New York crossover because of the simple fact that there is a greater cross over in terms of trading hours between London and New York than between London and Tokyo.
Trading forex during the New York session
The New York session has the biggest overlap with the London session, and so it is a good time to trade forex, especially the GBP/USD cross. The New York session is the last trading window to close on the 24-hour forex trading clock, and it often experiences high trading volume as a result as traders seek to squeeze the last bit of profit out of that trading session’s news announcements and events which affect the price of currencies.
Many USD crosses experience their highest trading volumes during the New York session, and this represents a considerable slice of the forex market with USD included on one side of 44.15% of all daily forex transactions.ii
Trading forex during the Tokyo session
The Tokyo session is perhaps the least liquid of the major sessions to trade forex because of the time difference and the limited cross over of only one hour between London and Tokyo. However, you can still trade forex during the Tokyo session.
Active pairs to trade during the Tokyo session are any JPY cross, such as USD/JPY or EUR/JPY. There is also a lot of liquidity and volatility in the AUD/JPY currency pair during the cross over between the Sydney and Tokyo session, which is one of the most volatile currency pairs on the market and the second most traded JPY cross behind USD/JPY.
You can trade different forex sessions with financial derivatives such as CFDs. These financial products enable you to speculate on the price movements of currency pairs such as GBP/USD without taking direct ownership of any currency.
You can use these products to go long or short, and speculate on forex prices rising as well as falling, with the accuracy of your prediction and the extent of the market movement determining your profit or loss. CFDs prices are based on the underlying market, and they can be traded with leverage – giving you full market exposure for a deposit, known as margin. However, please remember that while leverage can magnify your gains, it can also amplify your losses.
How do trading hours affect individual forex pairs?
Some forex pairs will be more heavily affected by an overlap than others. For example, EUR/USD and GBP/USD will see increased activity as New York gets into its stride while London is still fully active.
Typically, a forex pair has greater liquidity when at least one of its markets is open – USD/JPY will be busiest during the Asian or US sessions, but less so during the London or European session. EUR/JPY is more active at the open of the London session, and EUR/USD will not be quite as busy during the Asian session, and so on.
Whichever pair you trade, regardless of whether it is one of the biggest and busiest, or one of the more ‘exotic’ ones, it is important firstly to know which pieces of data are being published today, and secondly which sessions are likely to be the most volatile. Traders can then look to trade within either the volatile or quiet periods, with both approaches having their own merits and disadvantages.
As with so many other instances in trading, there is no one ‘perfect’ or ‘best’ time to trade forex. However, there will be times that are perhaps better than others, or times that will better suit a particular trading style or currency pair.
You can learn the times which work best for you and your trading style by opening an IG Bank demo trading account to practise with CHF 20,000 in virtual funds before committing real capital on the live markets.
What to bear in mind before trading during different forex market hours
There are several important things that you should bear in mind before trading during different forex market hours. For one, you should remember that liquidity will either be high or low depending on the time you are trading, and whether there is any overlap in that session.
The geographic areas included in the overlap also affects liquidity. For example, the London-New York overlap is often more liquid than the London-Tokyo overlap. The same can be said for volatility levels, with the FX market often experiencing greater volatility during the London-New York overlap.
Some traders like high volatility, such as those that use a scalping trading strategy, but others do not. As a result, it is important to have an effective risk management plan in place while trading during different forex market hours.
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