Understanding Forex Market Hours
Forex trading takes place on weekdays for 24 hours; therefore, traders cannot be locked out of the market. The market is opened on Sunday at 5:00 PM of Eastern Standard Time and gets closed on Friday by 5:00 PM Eastern Standard Time only to be opened again on the next Sunday of the next week, thus providing a trading window for the entire week excluding the weekends.
Major Forex Trading Sessions
The most prominent period to look into is the overlapped time of London and new york sessions. However, the New York session starts and ends at 8 in the morning and 5 in the evening, though the heaviest trading usually happens during the overlap with the London exchange which is from 8 in the morning to midday EST. This is a much-a-watched period for this reason as it’s characterized significantly by high volume and variability due to the parallel operations of two key global forex centers. Liquidity becomes excellent during the overlapped time zone due to high trading volumes, and tight spreads which are friendly to traders. The forex market is divided into four major trading sessions, each offering unique opportunities.
Sydney Session
Hours: EST 5:00 PM to 2:00 AM
Characteristics: Sydney session is the first one to start and it is rather more subdued than other sessions are, as a rule.
Tokyo Session
Hours: 7:00 PM to 4:00 AM of Eastern Standard Time
Characteristics: The Tokyo session experiences high volatility and is specifically preferred for trading the Asian currencies.
London Session
Hours: 3 AM EST to 12 PM EST
Characteristics: The London session is considered more active and can be very unpredictable, especially, during the overlapping time with the New York session [2].
New York Session
Hours: Mon to Friday = 8:00 AM to 5:00 PM, Sun = 24 hours
Characteristics: World’s second most active forex platform is NY session; heavy traffic in the U. S. dollar trading occurs. Overlap with the London session (from 4am to 8am Eastern Standard Time) is considered the most favorable for trading because of high amount of trades and high volatility.
Optimal Trading Times
According to the research, among all sessions, the best one is an overlap of different major sessions. The overlap between the U. S. and London times from 8:00 in the morning to 12:00 in the afternoon Eastern Standard Time is preferable especially during a trading week, because the trading volume is traditionally high, and there are more chances to earn money. Other overlaps relate to the Sydney and Tokyo session operating from 7:00 PM to 2:00 AM EST [4].
Maximizing Trading Opportunities
To maximize trading opportunities, traders should focus on:To maximize trading opportunities, traders should focus on:
Monitoring Overlaps: ‘Intraday trading takes place during the overlap of the two trading sessions to preferred liquidity and/ or higher volatility.
Staying Informed: Economic events and news which have a high likelihood of affecting change in the currency value.
Utilizing Trading Tools: Using information such as charts and indicators for formulating trades.
Through the knowledge of the forex trading timings, one is able to optimize on the tactics employed so as to increase the chances of success in forex trade.