As every investor with some experience in the Forex market knows, one of the main advantages of this financial market is that it operates 24 hours a day from Monday to Friday, which gives the trader the opportunity to take advantage of the many opportunities offered by the market throughout the day. This is because the financial market is not centralized as is the New York Stock Exchange, for example, so at all times there are large and small traders worldwide who perform currency transactions whose total volume is much higher than any other market. This makes the Forex market an excellent investment option as there is liquidity to open and close positions at all times. In other financial markets, the smaller trading volume sometimes makes it not possible to find a counterpart to buy or sell when a trader wants to open a long or short position.
However, this does not mean that it is profitable to trade in the Forex market at all times, as there are periods in which the market is relatively calm and without any clear direction or trend so it is difficult to find good opportunities to obtain profits (these are the periods of lower trading volume for which there are relatively few investors transacting in the market).
Off course, these conditions are not bad for all traders, as there are some investors that specialize in this type of market without trends and small price movements. These traders take advantage of movements in price ranges to get small gains with multiple trades. It’s just a way to make trading which however is not for everyone, in fact, not many traders are able to properly handle this style known as scalping.
For this reason, it is recommended to trade during market periods in it has a greater activity (trading volume) and a clear trend that allows the trader to take advantage of broader movements. It is during these periods of clear trends when traders can get higher profits more easily as it is when there is greater liquidity and a greater number of big and small traders whose transactions move quotes in one direction or another. Therefore it is essential that every trader knows and controls which are the moments or sessions in which the Forex trading is more profitable.
- Session of the U.S. market: The opening of this session is at 8:00 am EST (13:00 GMT) and the closing is at 5:00 pm EST (22:00 GMT).
- London trading session (European region): The opening is at 3:00 am EST (8:00 GMT) and the closing of the session is at 12:00 pm EST (17:00 GMT).
- Session of the Tokyo market (Asian zone): The opening of this session is at 7:00 pm EST (00:00 GMT) and the closing is at 4:00 p.m. EST (9:00 GMT)
- Australia’s trading session: This session starts at 7:00 pm EST (12 am GMT) and ends at 4-6 pm EST (11.09 GMT).
Also, there are hours in which two different trading sessions overlap each other like the following:
- Nueva York and London: Between 8:00 am and 12:00 am EST (EDT)
- Sydney and Tokyo: Between 7:00 pm and 2:00 am EST (EDT)
- London and Tokyo: Between 3:00 am and 4:00 am EST (EDT)
With this information, the trader has the possibility to determine the most suitable hours to enter the market and avoid those periods in which there is less activity and which provide little chance to perform profitable trades. To have better control over the most important market sessions, we include an application through which the trader can check the beginning and end of these sessions as these are periods with the highest activity in the market.
Final recommendations regarding the best times for Forex trading
- The best practice is to trade during the opening and closing of the market sessions. Usually, in the first hours after the beginning of a session is when there are ideal conditions to open positions. The same goes for the last hours before the session ends, meaning that the market presents new opportunities to enter and open new positions.
- Many traders believe that during the periods when different trading sessions overlap each other, there are also good conditions to trade in the market. This is probably because there is a greater volume of investors. Therefore it is a good idea to watch and observe the market at that time.
- It is also recommended to avoid any trade during the weekends. While the Forex market is closed on Saturday and Sunday, the time changes in each country can make that a session opens on Sunday in a country, as across the world in Asia or Australia is Monday and the market is open and operating. During those first hours at the beginning of each week, the Forex market can have quite irregular behavior so a trader should be careful if he opens a position at that time.
Based on these sessions, the investors can set a schedule to trade which must be followed steadily and disciplined in order to maximize their opportunities. By trading in this way, it is easier for the trader to understand how the market develops, as he will have more control of the movements it makes, especially with respect to the price movements of the different currency pairs in relation to the time of the day.
With this, the traders will avoid losing money unnecessarily by opening positions in the market at unsuitable hours according to their trading style. For example, if a trader prefers a market that moves strongly, he probably should trade at the opening of the American or European sessions (generally these periods begin with fast movements and are characterized by clear trends that can last at least several hours). But if the trader prefers a quieter market with low volatility, it is best to wait for the Asian and/or the Australian session.
When asked what is the most appropriate market session to trade, experts say that it is the European session as during this period the three major currencies are involved.