The volume of liquidity available for a specific currency pair differs significantly during different phases of a trading day
31 July 2021 09:41 AM
The Forex market works 24 hours a day phenomenon. The continuous trade cycle is facilitated by different forex market regions spread across the globe. This allows the flexibility to choose your trading hours according to your convenience. However, to capitalize on the 24-hour trading potential, a trader should have knowledge of the best trading times for the major forex markets.
Forex Markets: Why is it Essential to Know the Best Trading Times?
Timing is the most crucial factor in the forex market and determines your profit taking ability. Therefore, to develop a successful investment strategy, it is essential to understand market behavior for a specific currency pair during different times of the day. There are two fundamental reasons why a trader needs to understand the impact of time on the forex market:
Liquidity: The volume of liquidity available for a specific currency pair differs significantly during different phases of a trading day.
Currency range: The range of a currency depends on its geographical location and macroeconomic conditions. For smart investing, you should know when a currency has the widest and the narrowest range during a trading day.
Forex Markets: Best Trading Times Based on Geography
Forex market hours are separated into four significant session: London,Tokyo, Sydney, and New York. These are the biggest exchanging focuses, representing almost 75% of FX every day volume.
Here are the best trading times for the major forex markets across the globe:
London: 3 a.m. to 12 p.m. (noon)
New York: 8 a.m. to 5 p.m.
Sydney: 5 p.m. to 12 a.m. (midnight)
Tokyo: 7 p.m. to 4 a.m.
The overlap windows for exchanges are:
1 pm to 4 pm (GMT) when both New York and London exchanges are open
12 am to 7 am (GMT) when both Tokyo and Sydney exchanges are open
8 am to 9 am (GMT) when both Tokyo and London exchanges are open
Equally important are the market-timing overlaps, particularly the US-European and US-Asian overlaps. Overlap is a period when trading occurs in two markets simultaneously. For example, it has been seen that trading is maximum during the period when the US market is open along with another major market.