The forex market is the world’s largest financial market. It operates around the clock, 5 days a week, providing abundant trading opportunities to traders globally. Understanding the forex market’s opening and closing times is crucial for successful trading because it allows traders to align their strategies with the most active and liquid periods.
In this article, we will explore the forex market’s trading hours across different time zones, highlighting the key sessions and their significance in forex trading.
An Overview of the forex market
Otherwise known as the foreign exchange market, this market is where individuals or businesses go to trade currencies. It is a decentralized market, with no central exchange or governmental control, and enables traders to engage in currency exchange electronically.
The forex market is known for its high liquidity, significant trading volume, and constant price fluctuations, making it an attractive option for traders worldwide. The 7 most traded currencies globally are the U.S. dollar, euro, Japanese yen, British pound, Australian dollar, Canadian dollar, and Swiss franc. They are traded continuously while the forex market is open.
Forex trading sessions
The forex market operates through four major trading sessions, which overlap at certain times, resulting in increased trading activity and liquidity. These are:
The European session begins when the London market opens at 7 am (GMT). London is the most active session, characterized by high liquidity and volatility, as it overlaps with both the Asian and North American sessions. It is considered the forex capital of the world, and approximately 43% of all forex transactions happen in London.
It is called the European session because it includes several major financial markets such as Frankfurt, Geneva, Paris, Hamburg, Amsterdam, and others. Traders typically witness significant movement among European currency-based pairs such as EUR/USD, USD/CHF, GBP/USD, and USD/JPY.
The Asian session is comprised of two major forex markets, Sydney and Tokyo. The Sydney session runs from 10 pm to 5 am (GMT), and the Tokyo session runs from 11 pm to 8 am (GMT). The Tokyo session is considered somewhat slow-paced, with major currency pairs involving the Japanese yen (JPY) being the most active during this period.
Other popular currencies traded during the Asian session include the Australian dollar, the New Zealand dollar and the Japanese yen. Forex traders participating in this session typically focus on news releases from central banks and statistics agencies in Australia, Japan, and New Zealand to make better-informed trading decisions.
New York/North American session
The North American session begins with the opening of the New York market at 12:00 GMT. As the session overlaps with the European session, there is heightened trading activity, making it a popular time for forex trades. Major currency pairs involving the US dollar (USD) are most active during this session.
The Pacific session is the last session of the day. The Sydney and Tokyo markets are active during this time. While liquidity is relatively lower compared to other sessions, traders interested in Australian and New Zealand dollars (AUD and NZD) often participate in this session.
Best Trading Times
The overlap between different sessions creates periods of increased market activity and liquidity. This presents ideal opportunities for trading in forex.
- Asian-European: The overlap between the Asian and European sessions (00:00-07:00 GMT) is considered one of the most active periods. This is because traders from both regions actively participate. Major currency pairs involving JPY, EUR, GBP, and CHF often experience heightened volatility during this time.
- European-North American: The overlap between the European and North American sessions (12 noon – 4 pm GMT) is another vital period for forex trading. It has been said that when these two trading sessions overlap (London and New York), some of the largest volumes of trading transactions occur, with trillions of dollars in value-changing hands.
Weekend or after-hours trading
It’s important to note that forex trading is generally not available during weekends, as most global markets are closed. However, after-hours trading or extended trading hours are possible due to electronic trading platforms, allowing traders to react to significant news events or economic releases during non-market hours.
Gap trading is a strategy utilised by forex traders to capitalise on opportunities in forex trading. The strategy revolves around the belief that the opening price on Sunday will align with the closing price on Friday. The “gap” refers to the disparity between the closing price on Friday and the subsequent opening price on Sunday.
To engage in forex gap trading over the weekend, traders must identify online forex brokers that operate during weekend hours. Additionally, they should possess a thorough comprehension of market news and establish a well-defined strategy.
Learn to trade the forex market using a demo trading account
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Disclaimer: This material is for general informational & educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked, in this communication.