What are Forex trading hours and how do they affect your trading?
One of the most interesting aspects of forex trading is that it can be carried out on a 24-hour basis, from Sunday through to Friday. However, it makes sense to choose trading times that suit your strategies and the currencies you want to deal with. Let’s take a look at the main issues around forex trading hours that you should take into account.
Best forex trading hours
To decide on the ideal forex trading hours for your needs, you need to look first of all at the currencies you want to trade, in order to determine what’s best for you.
- The major currencies such as the US dollar and euro are traded 24 hours a day around the planet.
- Less widely-traded currencies may only be available in certain regions, each of which operate according to their own timetables.
- This subject can be more easily understood by dividing the trading day into the three main sessions based on GMT. These are the Asian (Tokyo), European (London), and North American (New York) sessions.
- The Tokyo times are from 11pm to 7am. This session also covers countries like Russia, China, and Australia.
- In London, the forex market is open from 8am to 4pm. Other European countries such as France and Germany also operate at this time.
- If you want to trade on the New York market, it can be done from 1pm to 9pm. Canada and Latin American countries are also traded at this time.
- You might also see other sessions mentioned, with Frankfurt and Sydney among the other leading centres.
The currencies in each region are most-heavily traded at the times that the session there is open. Therefore, if you want to trade the Japanese Yen or the Russian Ruble then choosing the Asian session as your forex market trading hours makes the most sense.
These sessions are when all the major financial institutions are working, so there is a greater level of volatility in currency trading and more opportunities to benefit from price swings. Major announcements by central banks and other institutions can cause massive reactions in the market, and this is the kind of thing that traders are looking out for.
Difference with other markets
There are some key factors that make forex trading hours different from other markets such as shares, commodities, and indices. The overall reason for this is that most other instruments are traded on specific exchanges that have defined opening and closing hours.
For example, what if you want to buy or sell shares from BP, Barclays, Rolls Royce, or other companies listed on the FTSE exchange in London? In this case, you need to carry out the transactions between 8am and 4.30pm, which is when the London Stock Exchange is open.
On the other hand, forex trading isn’t carried out on a single exchange. Rather, it is done by a huge number of brokers around the planet using their computers. Forex brokers are constantly posting new bid and ask prices for different currency pairs, making this a highly fluid and liquid market.
Your chosen trading style and strategy will also have an effect on the forex trading hours that you work within. As we have seen, most opportunities tend to appear in the busiest periods when each region is open for its session, but that isn’t the only issue to bear in mind.
- A scalper will often find trading opportunities when the North American market opens. This coincides with the European session being open and can lead to highly volatile conditions in the early moments of trading in New York. Scalpers may also find success at the relatively quiet period when New York trading is ending and small swings can be sought with a sense of calm.
- Day traders
- The period of overlap between European and North American sessions is also a good time for day traders. This is when around half of all trades are carried out, but there is still time to trade out of the position carefully during the rest of the day.
- Swing traders
- Swing traders may hold positions for several days or weeks, so there isn’t the same urgency to buy and sell on the same day. They will also tend to carry out their trades during the busiest periods when one or more markets are open, using the pre and post-market hours to analyse the situation.
- Position traders
- Finally, position traders are more concerned with the longer-term picture than short-term volatility. This means that they spend a lot of time carrying out fundamental analysis and don’t need to worry so much about working during the busiest periods.
Events impacting the markets
When considering the key forex market trading hours, we need to take into account the main events that can affect currencies around the planet. These tend to be linked to the opening hours in each region’s sessions.
- Inflation rate announcements.
- When the government announces the latest inflation rate, forex traders are among the most-interested listeners. Falling inflation rates tend to make a currency rise in value.
- Interest rate changes.
- When a central bank, such as the Bank of England or the Federal Reserve, announces a change to their interest rates their currency will usually be affected. In general terms, rising interest rates will lead to a currency gaining value.
- Political stability.
- Any signs of political instability will be closely watched by forex traders, who would normally expect a currency to decline in value if a country is going through a period of turmoil.
- Other financial events.
- Announcements regarding a nation’s debt level, growth, or balance of payments are all crucial bits of information for currency traders.
Next steps and more resources With a clear understanding of the main aspects of forex trading hours in mind, you can now choose the tools and any other help that you need to trade more effectively.
Not investment advice. Past performance does not guarantee or predict future performance.
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What is forex trading?Forex trading is the buying and selling of currencies on the foreign exchange market with the aim of making profit. Forex is the word's most-traded financial market, with transactions worth trillions of dollars taking place every day.
What are the benefits?
- Go long or short
- 24-hour trading
- High liquidity
- Constant opportunities
- Trade on leverage
- Wide range of FX pairs
How do I trade Forex?
- Decide how you'd like to trade Forex
- Learn how the forex market works
- Open a Skilling CFD trading account
- Build a trading plan
- Choose a trading platform
- Open, monitor and close your first position
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