Forex Market Trading Hours: The Most Profitable Sessions

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Choosing the right times to trade in the forex markets can maximize profitability and minimize risk. Many first-time forex traders monitor various economic calendars and trade vigorously on each release of data, trying to make the most out of the 24-hour-a-day, five-day-a-week foreign exchange market. However, this strategy can quickly deplete a trader’s reserves and lead to burnout, even for the most persistent because the markets operate globally across multiple time zones.

Unlike Wall Street, which operates on regular business hours, the forex market runs on the normal business hours of four different parts of the world and their respective time zones, allowing for round-the-clock trading. Traders can have a stronger chance of realizing profits while working a healthier schedule by gaining a better understanding of the market hours, setting realistic goals, and focusing only on key events.

Forex Markets: Hours of Operation

First, here is a brief overview of the four key forex markets (hours in Eastern Standard Time, or EST):

New York

New York, U.S. (open 8 a.m. to 5 p.m.) is the second-largest forex market in the world, watched heavily by foreign investors because the U.S. dollar is on one side of 88% of all forex trades. Movements on the world’s largest stock exchanges, the New York Stock Exchange (NYSE) and Nasdaq, can also have an immediate and powerful effect on the dollar. When major companies report earnings, provide future guidance, or announce mergers, the dollar may have an instant reaction.

Tokyo

Tokyo, Japan (open 7 p.m. to 4 a.m.) is the first Asian trading center to open. It is also one of the largest, just behind Hong Kong and Singapore.

The USD/JPY is an especially good pair to watch when the Tokyo market is the only one open, because of the heavy influence the Bank of Japan (Japan’s central bank) has over the country’s monetary policy.

Sydney

Sydney, Australia (open 5 p.m. to 2 a.m.) is where the trading day and week officially begin. While it is the smallest of the mega-markets, it sees a lot of initial action when the markets reopen on Sunday afternoon because individual traders and financial institutions are trying to regroup after the long pause since Friday afternoon.

London

London, U.K. (open 3 a.m. to noon). The United Kingdom dominates the currency markets worldwide, and London is its main component. London is the largest forex trading center in the world, accounting for roughly 38% of global trading, according to the 2022 BIS report (latest information).

The city also has a big impact on global currency fluctuations because the Bank of England (BoE), the UK’s central bank, sets interest rates and controls its monetary policy. Some forex trends originate in London, which is a great thing for technical traders to keep in mind. Technical trading involves analysis to identify opportunities using statistical trends, momentum, and price movement.

Best Hours for Forex Trading

Currency trading is unique because of its round-the-clock operation. The week begins at 5 p.m. EST on Sunday and runs until 5 p.m. on Friday.

The best time to trade is when the market is most active. When more than one of the four markets overlap, trading volumes are likely to be elevated, meaning there will be more significant fluctuation in currency pairs.

When only one market is open, currency pairs tend to trade in much tighter ranges, compared to when two major forex markets overlap.

Key Forex Market Overlaps

The best time to trade is during overlaps between open markets. Overlaps usually mean higher price ranges, resulting in greater opportunities.

Here is a closer look at three major overlaps that happen each day:

• U.S./London (8 a.m. to noon): The heaviest overlap occurs in the U.S./London markets. Nearly 58% of all forex trades take place in these two markets, making this overlap the most liquid and closely watched time period for many currency traders. The U.S. dollar and the U.K.’s pound sterling are the world’s first, and fourth most actively traded currencies respectively, and their overlapping trade sessions often offer the highest volatility and ample trade opportunities.
• Sydney/Tokyo (2 a.m. to 4 a.m.): This time period is not as volatile as the U.S./London overlap, but it still offers a chance to trade in a period of higher pip fluctuation. EUR/JPY is the ideal currency pair to aim for, as these are the two main currencies influenced.
• London/Tokyo (3 a.m. to 4 a.m.): This overlap sees the least amount of action of the three because the timing means most U.S.-based traders are still asleep. The overlap also only lasts for an hour, giving little opportunity for large moves to occur.

How News Releases Affect Forex Markets

While understanding the markets and their overlaps can aid a trader in arranging their trading schedule, there is one other factor that should never be forgotten: news releases.

A big news release can quickly energize a normally slow trading period. When a major piece of economic data is released—especially if it falls outside of the predicted forecast—currency can lose or gain value within a matter of seconds.

Dozens of economic releases happen each weekday across all timezones and currencies, but a trader does not need to keep track of them all. It is important to prioritize news releases between those that need to be watched versus less important ones.

In general, the more economic growth a country produces, the more positively its economy is viewed by international investors. Investment capital tends to flow to countries believed to have strong growth prospects and, subsequently, good investment opportunities, leading to a strengthening of the country’s currency. 

Additionally, a country with higher interest rates on its government bonds tends to attract investment capital, as foreign investors chase high yield opportunities. However, stable economic growth and attractive yields or interest rates are inexorably intertwined.

Examples of significant news events include:

• Interest rate decisions by central banks. Higher interest rates tend to attract more global investment and capital flows, strengthening the currency.
• CPI data, which measures inflation and can impact a central bank’s rate policy.
• Trade deficits, or imports versus exports, show cross-border capital flows and can impact exchange rates.
• Consumer consumption, which is a major indicator of economic growth in the U.S. and globally.
• Central bank meetings are watched closely by traders for indications of future interest rate moves.
• Consumer confidence, which measures how the average consumer feels about the economy and impacts consumer spending.
• GDP data, or Gross Domestic Product, which is a measure of all goods and services produced in a country.
• Unemployment rates, which measure the unemployed workforce. Lower unemployment tends to translate into better growth and a stronger currency, and vice versa.
• Retail trade, which measures how much is being spent by consumers and drives economic growth.

The Bottom Line

It is important to take advantage of market overlaps and keep a close eye on news releases when setting up a trading schedule. Traders looking to enhance profits should aim to trade during more volatile periods while monitoring the release of key economic data.

This balance allows part-time and full-time traders to set a schedule that gives them peace of mind, knowing that opportunities are not slipping away when they take their eyes off the markets or need to get a few hours of sleep.