The Forex market is open 24 hours a day 5 days a week and close during weekends. This provides trades great opportunities to trade at any time of the day or night. So should traders just trade whenever they have time to sit down in front of the PC? The right time to trade is one of the most crucial points in becoming a successful trader. In this article I would like to share about the trading hours when the market is the most active and therefore has the biggest volume of trades. Depending on your style of trading, you can then choose the best time for you to achieve your best trading results.
The activity on the Forex market is divided into 4 trading sessions: Pacific, Asian, European and North American sessions. Each session is active during the working hours of the region concerned.
Pacific and Asian Session
The Pacific session starts first when financial markets of Wellington (New Zealand) and Sydney (Australia) open. The Asian session is next to open, members of the Asian nation include Tokyo (Japan), Hong Kong (Hong Kong) and Singapore (Singapore). The active trading during these sessions is USD/JPY, AUD/USD and NZD/USD, since the opening of the Asian session is followed by the closing of the North American session of the previous day. The euro is almost not traded prior to the opening of the European session in London.
The European session starts at the close of the Pacific and Asian trading hours. The major financial centers of Europe start in London (England), Frankfurt/Main (Germany) and Zurich (Switzerland). London is the world’s largest financial center representing 30% of all FX trading volume. During the European session pairs with the British pound (GBP and Euro (EUR) are actively traded. The Japanese yen (JPY), on the contrary, loses investor appetite for it during the trading day. Additionally, the following pairs are traded with the U.S. dollar: USD/CHF, GBP/USD, EUR/USD.
North American session
In the middle of the European session the North American market opens its gates starting from the financial center in New York (the USA), roughly 15% of the global Forex trading volume takes place here. The most of the trades are executed within the operating period of both European and North American trading sessions, when the liquidity of such pairs as: USD/CHF, GBP/USD, USD/CAD and EUR/USD is great. By the middle of the North American trading hours when Los-Angeles wakes up, the trading in Europe stops, that is why the liquidity of the European cross-rates (EUR/GBP and EUR/CHF) falls. Experienced traders almost do not trade these pairs during the North American trading hours.
Since I use instaforex as my broker, I would use solely the instaforex time for easy reference.
Day Lights Savings – time brought forward one hour
Pre – Premarket
(The above time table highlighted is the actual trading sessions of the market)
There are hours when two sessions overlap:
Sydney and Tokyo: between 00:00 — 06:00 including pre market which I did not highlight
London and Tokyo: between 07:00 — 08:00 including pre market which I did not highlight
New York and London: between 15:00 — 18:00
Pips movement during the week
On Monday, the Forex market is usually quite unless there were some major events which happened during the weekend or late Friday during the New York trading hours. This is because most professional trader try to close all opened positions on Friday in order to avoid unexpected currency fluctuations caused by events which happened during the weekend. Examples of such events are the G7 events which discuss on trade relations. On Tuesday, forex activity start picking up and this lasts till the end of the Friday’s North American session. Just a note, the Non Farm Payroll week usually see huge spike in Forex volume from Tuesday onwards and last till Thursday. On Friday, volume dries up till the Non Farm Payroll results are out.