What are the Best Hours to Trade Forex?
Unlike other markets, the foreign exchange or Forex market remains open 24 hours a day, from Monday to Friday. This is a consequence of being a decentralized market.
In this article you will discover the hours of the different financial markets and which are the most interesting currencies to trade according to the Forex schedule.
The 4 biggest exchanges in Forex
The foreign exchange market, also called Forex, is the largest and oldest in existence. It is not a single trading place , as is the case with stock exchanges. For this reason it is said to be a decentralized market.
It involves multiple participants, from central banks, financial institutions and corporate clients, brokers and traders of all kinds.
Any currency can be traded at any time, since at any time there is an open site where exchanges are made, depending on the different world time zones (however, as we will see, there are more suitable hours than others for depending on which pairs currency).
In other words, when some markets around the world are closed, others remain open . For this reason, Forex is open from Monday to Friday 24 hours a day.
The most active financial centers are:
- New York
Finally, the Forex market is inactive on weekends, when all markets are closed.
What are the hours in each financial center?
The Forex market opens its doors on Sunday at 10:00 p.m., according to GMT time (it coincides with 11:00 p.m. of the Nigerian time). The market closes on Friday at 9:00 p.m., GMT time (in Nigeria it would be 10:00 p.m.).
During all this time it is possible to operate, since the schedules of the different financial markets overlap with each other. We can distinguish between three clearly differentiated sessions on each trading day.
It begins its opening at 22:00 hours (GMT) on Sunday (with it the week opens in the Forex market). Sydney is the first place to open, but it overlaps with Tokyo (at 00:00 GMT) and the latter is the one that sets the pace of trading.
This session is not very suitable for intraday trading in the case of operators based in Europe, since it coincides in the middle of the night (between 23:00 and 08:00 GMT).
However, the Asian session overlaps in its last stretch with the opening of the European centers .
During the Asian session, the most traded currencies are :
Japanese Yen: JPY.
Australian Dollar: AUD.
In this way, these are the most volatile currency pairs that you can find in this schedule :
It is the most important, due to the high trading volume it presents. This is due to the fact that the world’s most important transaction center remains open in London.
An hour before the London market opens, the Frankfurt open takes place (at 07:00 GMT), thus overlapping with the Asian session for its first two hours of trading. London time, on the other hand, opens at 08:00 (GMT) and coincides with Tokyo until 09:00 (GMT).
The Euro (EUR) begins to take action and, along with the pound sterling (GBP) and the United States dollar (USD) , they gain prominence as the most active currencies.
The European session is electrifying. While a currency pair is generally considered volatile when it moves more than 80 pips, during the European session the GBP/JPY and GBP/CHF pairs can move up to 140 pips.
In contrast, the NZD/USD, AUD/USD, AUD/JPY currency pairs can average around 50 pips. They are the least active during this session.
The European session ends at 4:00 p.m. (GMT) , an important time in Forex because that is when London ends the session. Frankfurt closes one hour earlier.
The American session is also one of the most important, given that New York is also one of the largest trading centers (behind London).
To tell the truth, London and New York overlap from 1:00 p.m. (GMT), a time when the American market welcomes the trading day. Thus, both remain open until the close of London (remember, at 16:00 GMT).
In this way, the hours in which the overlap between Europe and the United States remains are those of greater volatility, greater liquidity and greater movement .
During the American session, the most active currencies are the US dollar (USD), the British pound (GBP) and the euro (EUR).
It is curious that during this session the GBP/JPY currency pair has a lot of volatility . This is because its change is caused by the inverse correlations that occur between the GBP/USD and USD/JPY pairs. In fact, the GBP/JPY currency pair is considered to be the most volatile currency pair in existence.
On the other hand, the EUR/USD currency pair exhibits high liquidity but moderate volatility.
Finally, the American session ends at 9:00 p.m. (GMT), when Sydney opens again (except on Fridays, ending the week and when the Forex market closes until Sunday at 10:00 p.m. GMT).
This completes the cycle and the Forex schedules overlap with each other to ensure that this great market remains open 24 hours a day.
What is the best time to invest in Forex in Nigeria?
In principle, it depends on the geographical area in which you are. If you are a European trader, the Asian session may not be the most appropriate. Also, at this time there is not usually a trading volume as high as what we can see in the sessions of Europe and America.
On the other hand, the trading opportunities will also largely depend on the currency pairs you intend to trade and the trading opportunities you spot.
Along these lines we have seen which are the most active currencies and the most volatile pairs according to the Forex schedule. Keep in mind that the highest volumes usually occur with the overlap of the American session and the European session. Market openings are usually a good time to develop your trading operations