One of the main reasons why Forex trading has become so popular is because of how much more accessible it makes everything. Due to how it all works, Forex has opened the doors to trading for thousands upon thousands of people around the world. One needs only a working computer and internet connection these days to get started with trading. One of the key components of this accessibility and convenience is the fact that Forex is available all the time all throughout the workweek.
Indeed, there is no actual Forex opening and closing time, as it’s available 24 hours a day, of course with the exception of the weekends. This is one of Forex’s many benefits, and what makes it one of the default options for many people when it comes to trading. This being the case, the concept of timing is, regardless, still extremely important in Forex. The reason for that is that while Forex trading goes on throughout the whole day, it does so based on different hours of four parts of the world, with each different market being open on different parts of the day. While this doesn’t change the fact that you will have uninterrupted access to trading 24 hours day, taking this into consideration is still very important, especially when it comes to a dynamic market like Forex, where sometimes each second can mean a lot.
In this guide, we will be discussing all you need to know about the importance of timing for Forex trading, how it relates to you, and how it should affect your decision-making as a trader. By the end of reading this, you will have a decent understanding of the importance of Forex market trading hours and know exactly why they should matter to you. So, without further ado, let’s dive in.
Timing is key
One common pattern that we noticed with how people approach Forex trading is that due to its 24/7 nature, many stay up all day, obsessively checking every relevant piece of information so they could use it to their advantage.
While this is a viable approach and has yielded great results for tons of people, it can be really draining, and can definitely lead to burnout if done long enough. The alternative, on the other hand, is to utilize the different timeframes of Forex based on different regions and approach it accordingly based on your specific goals. This is a much more prudent approach and something that will definitely pay off in a major way in the long run, if you instill it as a habit, and start doing it right away more frequently.
Forex market opening hours for different regions
As mentioned, international Forex trading timeframes are split and classified based on different regions’ countries, and more specifically capital cities of these countries. These cities are considered to be the main Forex cities of different regions of the world, and as such, the timeframes are calculated and chosen based on these countries.
The reason this is the case is that these are some of the leading Forex countries in the world, and contribute the largest number of Forex trading volumes around the world. Naturally, the currencies of these countries happen to be among the highest-traded currencies in the world. Let’s take a brief overview of these major Forex “Meccas”. Keep in mind, that these timeframes are based on Eastern Standard Time (EST). If you are interested in Forex market hours GMT, make sure to conduct appropriate conversions so that you’re not off-time.
Sydney (5 P.M – 2 A.M): Although the smallest in size and significance among these biggest Forex countries, Sydney is still considered to be one of the most significant markets globally. Sydney is actually the very first market to open during the day, from 5 P.M to 2 A.M. Sydney is the home to the ASX (The Australian Securities Exchange), which has had a maximum daily turnover of $4.685 billion AUD at its height, with a $1.9 trillion AUD market cap, securing it space among the top 16 exchange groups. As the leading financial center in the region of Oceania, Australia/Sydney has secured itself a spot among the “big boys”.
London (3 A.M – 12 P.M): London is the biggest trading capital in the world. The UK absolutely dominates the global markets when it comes to trading. With over 43% of the share of the global trading volume, London is, by far, considered to be the main trading center of the world. Besides being the capital city of the main financial country in the world, London’s significance is underlined by the fact that it is home to the headquarters of the Bank of England – the main bank of the UK – and as such, has a definite influence on how it sets monetary policies in regards to the things like management of the GBP.
All of this considered, it is easy to understand why London has such a direct effect on the global Forex trends and is thought to be one of the main influences on them. This is an important thing to take into account for the traders who prefer a more “technical” approach, analyzing the market and all of its small events to identify the trends while and before they occur, based on different sorts of data points such as price fluctuations, different statistical values depicting trends, the momentum of certain things, and much more.
Tokyo (7 P.M – 4 A.M): Tokyo, the Japanese capital, is probably the third most important Forex country right now. The country has made some really committed effort to establish itself as one of the main Forex players, at which they definitely succeeded. Open from 7 P.M to 4 A.M, Japan is the first financial center of Asia to start the operation throughout the day. Japan is regarded as the biggest Forex center in Asia, as it takes the largest piece of the whole trading picture in Asia, exceeding the major Asian financial hubs like Singapore, Shanghai, and Hong Kong.
New York (8 A.M – 8 P.M): New York is, without a doubt, one of the trading capitals of the world. It is the home to the New York Stock Exchange, which is the second-largest stock exchange in the world. Throughout many years, New York has solidified its spot as one of the main players on the global financial trading scene. One of the key reasons for this is the US dollar, which depends almost 90 of all global trading volume.
Because of the reasons described above, any change or development occurring on this market, no matter how small, has the potential to have some huge effects on almost everything else. As the major US-based companies sell, buy or otherwise trade any assets, this has an immediate effect on the US dollar, which by itself has a direct effect on the economy of the rest of the world. With this considered, it’s easy to understand why the US market specifics should be one of your key considerations, no matter where you’re based, and which market you’re involved in.
Deciding on your best Forex trading time frame
Ok, so now we know what are the actual opening ours for different global Forex markets, and that not all Forex hours are equal to each other. There are certain times when it’s more favorable to trade, and certain times when it’s best to take a pause. Now, the question is, what are the best hours to trade, based on these timeframes?
The answer is that there is no overall “best” hour to trade that will be applicable to all situations. Rather, the best trading timeframe for you will vary depending on your goals. What exactly are you trying to accomplish, and with which route? In other words, what particular assets are you interested in trading, and where? These are the questions that you will need to first know the answers to before you can conclude on what is the best time to trade Forex for you.
As an example, if you are looking to trade two specific currencies, there a certain time windows in which you are likely to be more successful. For instance, the USD/JPY is a very good pair to go for when the Tokyo market is the only one that is open, in large part also due to the great influence the Bank of Japan has over the market in the timeframe of 2:00-3:00 Forex market hours EST. These specific timeframes for specific assets will depend on the opening hours of the markets that these assets are mostly dependent on. This means, that if you’re interested in trading a certain currency, the JPY being an example that we just brought, then you need to make sure that you align your activity accordingly.
When the market times overlap
Now, as you may have noticed, although Forex opening market time is different for these regions, some of them actually overlap with each other and can be open at the same time, throughout some parts of the day. Many people do not pay attention to this fact, but actually this is very important to consider, as it can be of huge help, and help you achieve much more success.
Usually, as a rule of thumb, it is generally accepted that it’s more favorable to trade when there’s more than one market open at the same time. Why? Because this grants you to bigger and better opportunities. When only one market is open, generally, the chances of making higher profits are minimized due to the fact that the currency pairs are tightly locked to a spread of 30 pips. Conversely, when you trade with two markets being open, the movement of pips goes as high as 70. This is even more so the case when some significant market updates occur, and the news gets released to the public.
While it’s known that sometimes even the smallest developments can have huge effects on the market, this is more so the case when the “traffic” on the international Forex markets is higher. Considering this, it is easy to see why so many people are always obsessing over every single detail related to things like timing, with some of them even going as far as using a Forex market hours monitor. While this may seem like overkill to you, tools like these are actually very common, as they are extremely helpful and useful. After all, these small details can make all the difference and can make or break your trading experience. Now, let’s discuss what are some of the market hour overlaps that occur on the global Forex markets, and which are the ones to observe and take into account.
Overlaps of Forex trading times EST
- New York – London: These markets overlap from 8 A.M to noon, making it the lengthiest one of all the overlaps that occur on the global Forex market. Expectedly, it is also regarded as the most significant overlap as well, which is understandable, considering London’s position as the global capital of Forex trading and the United States’ position as the global economic leader. It is estimated, that over 70% of all trades throughout the day occur exactly when these two markets overlap, with the obvious reason that the USD and EUR are two of the most popular currencies to trade, along with GBP. Naturally, with so much action going on, this is considered to be one of the most volatile times to be trading.
- London – Tokyo: The Forex opening time overlap for these two markets occurs from 2 A.M to 4 A.M, and is also very popular among many traders that it is not nearly as volatile as the previous overlap we discussed, but at the same time. This opens up doors to a lot of opportunities and makes this overlap quite popular among beginners and experienced people alike. Particularly interesting is the currency pair of EUR/JPY, as well as GBP/JPY, as these are the currencies that are majorly influenced by this overlap.
- Sydney – Tokyo: Out of all the overlaps, this is probably the one that could be considered the least “significant”, as there is not all that much action going on, mainly due to the fact that the overlap itself is quite short, lasting only for an hour between 3 A.M to 4 A.M. Additionally, due to the time differences, many US-based traders simply are not able to participate in a major way, as it would be too late there, and for most of them it is not worth it.=
Significance of timing during news releases
By now you probably understand the importance and significance of Forex market opening hours, as well as why and how utilizing things like overlaps, can completely change the course of your success and win ratio. However, there is one more thing that is at least in small part related to this matter but is of quite major importance, and it is the importance of news releases on the Forex markets, and the significance of timing when they occur.
Forex is quite a dynamic and ever-changing environment. Seemingly insignificant news can sometimes have dramatic effects, and can completely change the course of events to something completely different. Considering this, if you want to have a productive, and more importantly, safe Forex trading experience, then it is really important to make sure that you’re keeping yourself in-the-know when it comes to the important and significant developments that occur on the market. At the very least, you need to make sure that you’re following the major news related to your most commonly-traded assets.
With that being said, it’s important to note, that many people sometimes go a bit overboard with this, and obsess over every single small detail. This is not sustainable, and will not work in the long term. Rather, your approach should be to see the forest for the trees and take a more focused approach, and narrow it down to your main interests. There are dozens of economic events taking place each day, but you simply do not need to be aware of them all.
As for the general events to keep track of besides the Forex time frames, you should always be aware of the general economic performance of the country. Naturally, the more the country grows economically, the better the investment prospects are going to be in the country, attracting a larger number of international investors. This is because the investments only flow in the countries that are believed to be good economic performers, strengthening the country’s exchange positions.
Some of the other things to keep in mind are the trade deficits of the country and its export-import ratios, major news from the central banks, GDP changes, unemployment rates, consumer consumption, and more. Keep in mind, again, that these are simply general points to consider and not something that should take a significant amount of time from you.