Forex trading hours: when is the best time of day to trade?

What are forex’s trading hours – and why should FX traders be taking the time of day into account?

Forex traders need to make profits, whether that movement occurs over the course of one day, several days, or even several weeks. Intraday traders need volatility within the trading day itself so, by definition, FX traders that are looking to open and close trades within one session need this movement.

What are forex’s trading hours?

The forex market is open 24 hours a day – but each day is broken up into several sessions.

The first of these is the Asia-Pacific session. Australia begins trading, with Sydney opening from 10pm to 7am (all times are UK summer time) the following day, followed by Japan (which makes up the biggest slice of volume in the Asian session) from 11pm to 8am, and then joined by Hong Kong and Singapore. Then comes Europe, with London as the biggest player, opening at 7am and closing at 4pm. Finally, the US begins to enter the fray, with New York opening from 12pm to 9pm. At this point things will begin to wind down before the whole show begins again a few hours later.

It is important to remember, though, that forex trading hours can vary in March, April, October and November, as countries shift to daylight savings on different days

Why are forex’s trading hours important?

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. So, for example, the UK’s major data releases come out at 9.30am, while the US tends to publish its numbers from 12.30pm, until about 3.30pm. These announcements can generate significant volatility in and of themselves, so every forex trader needs to know when they are published.

IG provides an economic calendar, and highlights some of the bigger releases on the Week Ahead page.

How trading hours affect individual forex pairs

Some forex pairs will be more heavily affected by the overlap than others. For example, EUR/USD and GBP/USD will see plenty of activity as New York gets into its stride, when London is still fully active too. It pays to be aware of this, even if it doesn’t usually mean a trader has to alter his entire approach.

Of course, it is not surprising to say that each forex pair is most active when at least one of its markets is open. For example, USD/JPY will be busiest during the Asian and US sessions, but less so in Europe. 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 things in trading, there is no one ‘perfect’, or ‘best’ time to trade forex, but there will be times that are perhaps better than others, or times that will suit a particular trading style better. Learning this will require trial and error, but it is one of those necessary learning curves that cannot be bypassed.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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