The beauty of the forex market is the 24 hours a day nature of its trading hours. The forex market is open 24 hours a day, from Sunday after EST (Eastern Standard Time) to Friday afternoon EST. The global nature of the forex market allows traders to work 24 hours a day during these days. As one market closes, another one is opening, giving traders the opportunity to trade 24 hours a day.
Although a trader can technically trade 24 hours a day, there are optimal hours to trade during the day. Some forex trading hours present more profitable opportunities than others, so it is important to know when to trade so that you are not wasting the one resource you can get back: your time. So what are the most profitable forex trading hours?
How it works:
It is no secret that the best time to trade in any financial market is when it is most active with large trading volumes. The best time to enter forex markets is when large volumes of currencies are being traded. During these hours, traders can take full advantage of the price oscillations occurring, and enter the market throughout these peak hours pulling your profit from the high volume of trades. Since the forex market is open 24 hours a day, the best time to trade is when several countries are trading at the same time. During these overlapping periods is when the overall forex market is the most active with heavy trade volume and biggest pip movements. You do not want to waste your time looking for trading opportunities in a slow market.
The highest trade volume and biggest pip movements occur when the big 3 markets overlap; when the Asian market, the European market and the U.S. market are all open simultaneously. These are the trading hours you want to target in order to find the most profitable trades.
What to be aware of:
Below is a breakdown of the forex trading hours for each market:
New York – 8:00 am to 5:00 pm EST
London – 3:00 am to 12:00 noon EST
Sydney – 5:00 pm to 2:00 am EST
Tokyo – 7:00 pm to 4:00 am EST
Remember the key to profitably trading the forex market is to identify the times when currency markets overlap. This is where you will be able to find the highest trade volumes and biggest pip movements. Here are 3 key trading times when the markets overlap:
New York and London – 8:00 am – 12:00 noon EST
Sydney / Tokyo – 7:00 pm – 2:00 am EST
London / Tokyo – 3:00 am to 4:00 am EST
What to look for:
Always keep in mind that some days of the week have more transactions than others. In general, pip movements for the major markets are greater in the middle of the week. Some hours of the day are busier than others, but generally speaking, Tuesday and Wednesday see the most pip variations for the major markets.
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