Which are the best Forex trading hours?
A common concern of most traders is what is the best time for trading in foreign exchange (Forex) market?
The answer is; trade when it is most active. That would be when the trading spreads (differences between ask prices and bid prices) are narrowed.
In such situations very little money is available for market makers who are helping in currency trades, and they leave a lot of money for traders to personally pocket.
Most Prominent Forex Exchange Markets
The major 4 exchanges for Forex market are in the towns of Sydney, New York, Tokyo and London.
Forex traders spend most of their time in revising, while paying significant attention to hours when two or more exchanges overlap each other.
While multiple Forex exchanges open simultaneously, this doesn’t only increases the volume in trading, but it would also add up to the volatility (the rate or extent to which currency prices or equity changes).
Both these factors significantly influence and benefit traders.
For most of us, this might seem a little ironic. After all, most investors typically fear volatility of the market. In the game of Forex, however, better volatility can transfer as better opportunities for payoff.
Related: What are Forex trading sessions?
Best Forex Trading Hours Worldwide
Forex is available with independent 15 exchanges worldwide, which opens weekly from Monday to Friday. All exchanges are available with unique hours for trading.
But looking from the perspective of average trader, these are four of the most vital time windows (all times here are in the Eastern Standard Time):
New York City: 8 a.m. – 5 p.m.
Tokyo: 7 p.m. – 4 a.m.
Sydney: 5 p.m. – 2 a.m. (at midnight)
London: 3 a.m. – 12 p.m. (at noon)
While all exchanges independently function, all trade same currencies. Therefore, when two of these exchanges remain open, the total traders who actively buy or sell a certain currency would dramatically increase.
All asks and bids in one exchange directly impact asks and bids in various other open exchanges, while increasing volatility and plummeting market spreads. In case of following windows this would be true.
- 8 a.m. – 12 p.m. (noon), with open exchanges in London and New York
- 7 p.m. – 2 a.m. morning with Sydney and Tokyo exchanges remain opened
- 3 a.m. – 4 a.m. morning with both London and Tokyo exchanges remaining open.
8 a.m. morning to noon is the most ideal best Forex trading hours for London and New York exchanges. Up to 50% of total Forex trades happen in both these trading centers.
On flip-side, from timings of 5 p.m. to 6 p.m, most of the trading is present in Sydney and Singapore exchanges, where you get quite lesser volume compared to New York/London Window.
However, a lot of exceptions are there, and expected volume for trading remains on assumption that there are no major developments and news that remain in light.
Military or Political crises that are able to develop or otherwise during slow hours of trading can lead to prospective spike in trading volume and volatility, making it the most favorable trading time.
High-Volume Trading Hours Aren’t Necessarily Profitable
Forex traders must continue with caution as currency trades can often have higher rates of leverage from 1000 – 1. With higher profit opportunities, the trade ratio also has higher risk loss of a whole investment in one trade.
A Citibank study in 2014 found that only 30% of Forex retail traders can break even and more. 84% of the polling traders believed that they can earn good margins in Forex market.
The main takeaway here is that investors who just started with Forex markets must open accounts through firms offering demo platforms. After getting familiar with all essential aspects, they can trade confidently in these markets.
The Balance doesn’t provide any advice for investment, tax or other financial services. The information here is presented without determining risk tolerance, investment goals and financial conditions of an investor and would not be ideal for all traders.
The bottom line is, when it comes to choosing the best Forex trading hours, past performance doesn’t indicate future outcomes. Investment involves certain amount of risks with possible principal loss.