Why is it important to know market hours in Forex?
As with stocks and bonds, trading in forex is also heavily influenced and controlled by the opening hours of the exchanges in the world’s financial capitals. It is these epicenters of the global market where trillions of dollars worth of forex are exchanged every single day.
While you can technically buy and sell forex at virtually any time, the hours during which you choose to do so will have a significant impact on your overall trading strategy and profits. When trading currencies, as with any other financial asset, market hours matter. With that in mind, read this essential guide to market hours in forex to find out everything you need to know.
With most forex brokers, you will be able to trade currencies on the open market 24 hours a day, five days a week. Markets are always closed at weekends, meaning that you will not see any price changes on any currency pairs on Saturdays and Sundays.
However, this is not the full story. The hours that specific markets are open will have a substantial impact on your forex trading strategy. Certain times periods will be subject to greater levels of volatility and varying levels of liquidity, two factors that are absolutely decisive in currency trading, as we will discuss below.
Let’s say you are trading NZD/JPY, which is New Zealand Dollars and Japanese Yen. Both of these currencies are located in the Asia Pacific region, with markets in Wellington and Tokyo driving price changes in each currency respectively.
The hours of the days when these markets are open will see the greatest amount of activity in these currencies throughout the day. Outside of these hours, activity will be less frenzied. This means that, outside of the hours of, 10pm and 4:45am GMT (when the New Zealand market is open), traders in the UK will not see much demand for New Zealand dollars, meaning that not much will be happening in this market.
When activity is sluggish, the opportunity to make a profit is less. This is the main reason why it is essential to know the market hours for the forex that you are trading and investing in.
Forex market hours explained
Forex market hours are the main determinants of two major factors: volatilityand liquidity. Volatility is the amount of activity (i.e.e price fluctuations) that you can expect to see in a currency or currency pair during the trading day. Meanwhile, liquidity is best described as the level of access you have to a currency market.
High liquidity is driven by high demand. If liquidity for a particular currency is high, you should be able to buy and sell that currency at market rates instantly and for a good price. If liquidity is low, it can take longer to execute trades, as the demand is not there, which makes it more difficult to capitalise on price trends at the exact moment you need to.
If you trade currencies when both currencies in a pair have open markets (i.e. trading GBP when London markets are open), you are likely to get more volatility and greater liquidity, which is what you want – especially if you are day trading. As such, it is very important to know the exact market hours in forex for every currency that you are interested in.
This way, you can trade those currencies at the best possible time, increasing your chances for success. For this section, all market hours are quoted in GMT, meaning that the hours you are seeing are the hours that each market is open during UK time.
New York market hours
Opening hours: 2:30pm to 9:00pm GMT (9:30am to 4:00pm ET).
New York City is home to the epicentre of global finance: the New York Stock Exchange, located on Wall Street. New York market hours are the most important not only for the US, but also the whole world, especially when it comes to forex trading. This is because the US Dollar, known on markets as the Greenback, is the world’s de facto reserve currency and the world’s go-to “safe haven” currency. The price fluctuations of the Dollar directly impact every other currency in the world and almost every other currency pair, owing to the centrality of the US to the global economy. When trading US dollars in any capacity, you should ensure that your trading session overlaps with New York forex market hours.
Tokyo market hours
Opening hours: 12:00am to 6:00am GMT (9:00am to 3:00pm JST).
Tokyo, alongside New York and London, is often described as one of the three “command centers” of the global economy. Although Japan’s economy has been overtaken by China’s, Japan remains the single most important financial center in Asia and the most important market for Asian forex trading. Anyone with any exposure to the Asia-Pacific region should pay close attention to Tokyo market hours. If you are looking to diversify your portfolio with currencies that are insulated somewhat from the US Dollar, the Japanese Yen is a great place to start.
Sydney market hours
Opening hours: 12:00am to 6:00am GMT (10:00am to 4:00pm AEST).
Although it is not the capital, Sydney is by far and away Australia’s financial epicentre and is the place where virtually all Aussie Dollar trading is cleared. Trading AUD can be frustrating for UK traders, given that Australia’s distance makes for some pretty inconvenient time zones. However, Australia is the wealthiest country in the ASEAN region and the Aussie Dollar is a critically important global reserve currency. AUD is often traded in a minor pair such as AUD/NZD or AUD/JPY. It can be traded with currencies outside the region such as GBP or EUR, but it is important to trade when Aussie markets are open and overlap with other markets, which is always very late at night, unfortunately.
London market hours
Opening hours: 8:00am to 4:30pm.
London is Europe’s largest financial centre by a very wide margin and is home to one of the largest and most important stock exchanges on Earth: LSE. In addition, London is arguably the single most important market for forex trading, given that a staggering $2.4 trillion a day, or almost half of all daily global forex trading, takes place in London. No matter which currencies you wish to trade, it pays to do so when London markets are open, as you are guaranteed to have a greater amount of liquidity and volatility during these hours. When trading GBP, virtually all price activity occurs during London market hours.
When is the best time to trade Forex?
As mentioned, the best time to trade forex is when the markets you are interested in are open. When trading currencies from two very separate and distinct markets, it is best to try and find some overlap. For example, if you want to trade GBP/USD, then 2:30pm to 4:30pm GMT is the period when both London and New York markets are open, thus representing the period where you will find the greatest liquidity and the greater volatility. When it is not possible to find a period of overlap, such as with GBP/JPY, the next best thing is to find overlap between one currency in the pair and the US, which is usually possible.
When should you not trade forex?
The worst time to trade forex is when none of the markets you are involved in are actually open. This is because there will be no activity in either market, meaning there is nothing to influence a price shift in either the base currency or the quote currency. If you are a day trader trying to realize profits from incremental price shifts during the trading day, you must trade when at least one market is actually open and active.
Volatility is often key to profitability, at least for those looking for short-term gains on the forex market. Therefore, you should always avoid trading when markets are closed. Trading on weekends is usually avoided for this same reason. However, you can speculate on forex prices over the weekend by trading forex futures or CFDs.
Choose a broker with unlimited market access
In order to make the most out of the market hours in forex, you need the right broker. A quality broker will provide you with unrestricted access to all of the currency markets you are interested in and will keep you updated on the best times to trade. To find the right broker for your needs, make sure to consult our expert and in-depth forex broker reviews today.