Forex trading is no game of chance. While it offers round-the-clock trading opportunities, not all trading hours are the same. You must also identify when the market is at its peak to know the best time to trade forex.
Understanding market hours is crucial to maximising profits and minimising risks on your investment. Let’s find out the best time to trade. Read on.
Overlapping Forex Market Hours
The forex market has four major trading sessions that overlap to keep the market active 24 hours a day. Each session opens and closes at specific times of the day. It operates from Monday to Friday according to your time zone.
While anyone can trade at any time suitable, certain sessions present more chances of earning profits. Let’s take a look at each session here to figure out the most favourable time to trade:
Sydney Session
Sydney sets the tone for the trading week. It opens at 2200H and closes at 0700H GMT. It is the first session to open each day.
Some players prefer to trade at this time because it is quiet and stable. Liquidity in this session is often low compared to others.
Tokyo Session
Activity tends to rise when the Asian market is involved. The USD, EUR, and AUD currency pairs often see more movement when paired with the Japanese Yen.
The Tokyo session opens two hours after Sydney. It starts at midnight and ends at nine in the morning GMT.
London Session
Things start to get heated up when the London market opens. It is at this time when volatility increases, giving you more chances. EUR/USD, GBP/USD, and EUR/GBP are most active during this session.
The world’s busiest trading hub is in London. It covers around 34% of the total forex volume.
New York Session
A great explosion takes place when the London and New York sessions overlap. At this time, there is high liquidity. The trading volume increases and price movements are sharp.
The New York session starts at 13:00 and ends at 22:00 GMT. When the two largest forex markets overlap, it is the best time to trade forex.
Best Times to Trade
Market overlaps are favourable times to trade forex. It is when liquidity and volatility are at their peak. Keep an eye on the following key market overlaps:
London-New York Overlap
This trading period is most suitable for traders dealing with major currency pairs. It happens between 01:00 and 17:00 GMT. It is the busiest and most volatile trading window.
Tokyo-London Overlap
This quick moment takes place between 08:00 and 09:00 GMT. It may not be as intense as the London-New York overlap, but it still promises some profit opportunities.
Off-Peak Hours
Market movement can be slow during off-peak hours. The risk of sudden price changes is low. However, lack of activity means lesser chances of earning profits.
Key Takeaway
Trading forex is all about timing. It is always best to trade during peak times when liquidity is high and volatility is increased. Off-peak hours are favourable to those who prefer stable market conditions. Start trading with IC Markets today.
