Learn Forex Trading #9: Forex Trading Hours

Filed under: Learn Forex Trading |


Part 1: Trading Hours in Forex

We all have heard that the forex market is a 24 hour market. However this does not mean that a trader must trade 24 hours a day. There are specific times however when there is increased volatility as a result of the presence of many market players, and these are the times that traders should come to the trading table to see what they can take from it.

Forex Trading Hours

Forex Trading Hours

To understand this better, we need to look at the different trading time zones and how they determine what hours a trader should trade. The main forex market zones in the order of time of opening are: Sydney, Tokyo, London and New York.

A typical active forex session lasts about 12 hours. Take a look at the diagram below to get a pictorial view of the forex trading hours, zone by zone.

As you can see very clearly, there are areas where the time zones overlap. These are:

1)      The Tokyo session and the London session at 3am to 4am EST (i.e. 8am to 9am GMT).

2)      The London session and the New York session at 8am to 11am EST (i.e. 1pm to 4pm GMT).

3)      Sydney session and Tokyo session at 7pm to 2am EST (12midnight to 7am GMT). This is not a very significant trading overlap zone since Tokyo and Sydney are almost in the same time zones.

How can a trader put this information to use to decide the best time to trade?

The times where we have overlap is when there is maximum market activity because there are more players in the market at those times. That is when you have the greatest volatility and therefore greater market opportunities. Volatility is determined to a large extent by the number of market players active in the market. So a trader is better suited at the times mentioned above, especially during the Tokyo/London and London/New York overlap zones.

Please note in the above chart that the times are in EST (i.e. the East Coast time in the US, which is the standard time used in the forex market). Use the time clocks on the internet to determine how far away your time zone is from EST, so you know when you can trade the overlap zones in your local time.

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