What traders should know about forex market hours is that you are able to buy, sell, exchange and speculate on currencies 24 hours a day, five days a week. Indeed, as some markets are closing for the night, others are opening somewhere else since forex trading hours are overlapping currencies are being traded continuously. In other words, forex trading almost never stops.
Forex traders new to the world of foreign exchange tend to think that since the market is open 24 hours a day they can trade whenever they choose during the day; that is true but it requires some clarification. When it comes to forex trading some hours are presenting better opportunities than others. By better opportunities we mean potentially making better profit.
The best time to enter the forex market is when large volume of currencies are being traded. Usually the largest volumes of currencies are traded when several countries are trading at the same time. The more countries are actively trading the larger the trading volume is going to be; and we will have bigger pip movements. Despite the fact forex trading is open 24/5, the most traded hours in each country are from 8am to 4pm.
In order for us to take advantage of heavy trading volume it is worthwhile to determine when forex market hours in different countries are overlapping. When currencies are the most active that’s when traders have a better chance of making a profit. Slow markets offer smaller chances of profit and therefore forex traders usually stay away. Generally speaking, the most active forex trading hours all between the London market opening around 8:00 GMT and end with the market in the US closing around 22:00 GMT.
Most any seasoned forex trader will tell you that the best time to trade currencies is when the market hours of operation overlap. This actually occurs several times each day. The overlaps are as follows:
London and New York: 8am – 12pm
Sydney and Tokyo: 7pm – 2am
London and Tokyo: 3am – 4am.
After you have memorized these times and observed how the market acts during these hours you will be ready to move on to forming strategies, trading currency and making money.