Forex Market Hours – Online Indicator for Open & Best Times to Trade FX
The currency market, also known as the forex market, attracts traders worldwide due to the endless possibilities to profit from its volatility. Forex market hours offer a strong incentive too, as the market is open Monday to Friday, with no closing time whatsoever.
The saying goes that the market follows the sun. Each financial center opens up as a new day starts and trading goes around the clock until Friday’s New York close.
Even if over the weekend the market is closed, traders can’t completely ignore events going on around the world. Many times, what happens over the weekend has significant implications for the opening prices come Sunday night/Monday morning.
Hence, we cannot say that the forex trading hours are limited to Monday to Friday. Instead, a more accurate statement would be that the forex market, while closed over the weekend, reacts to news coming out on every single day. Weekends included.
Think of elections, referendums, or even geopolitical events and agreements. Usually, they take place over the weekend and many times the opening prices on Monday gap higher or lower. Gaps in forex trading are a common thing but not during the trading week. The only possible day to see a gap in the FX market is at Monday’s opening.
However, events over the weekend (mostly political ones) have the power to shift the supply and demand balance in such a way that the market reflects that by showing a gap.
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Different world forex market hours aren’t a bad thing for traders. Depending on the time zone they live in and the strategy they use, they adapt their living and trading style accordingly.
For instance, the Asian session is known as very slow, with most of the currency pairs not moving at all. Hence, if living in Asia and trading FX, one needs to adapt their trading style by using range trading strategies and scalping. Or, adapt the living style, by waking up and trading more liquid and vivid sessions.
Forex Market Hours Worldwide
As mentioned earlier, the forex market follows the sun, with various financial centers opening to business. Before anything, we should say that the biggest financial center in the world is London, and not New York.
London is the city of forex that clears vast amounts of euros and even dollars, much more than New York. Now that the Brexit vote became a reality, much of the euro clearing business moved to Frankfurt, and the trend is set to follow the same path.
It remains to be seen if London will keep its place as the top financial center in the world, depending on how the Brexit negotiation with the European Union goes.
Besides London and New York, Sydney and Tokyo enter to complete the picture. The four cities illustrate the four main time zones important for forex traders.
Any given working day starts with Sydney opening the FX market. The forex market hours in Sydney are from 21:00 GMT until 05:00 AM, when business turns off, branches from other parts of the world take over from where Sydney’s time ends.
All serious investment houses have branches in all four financial districts so that to continually monitor the market and react if needed as quickly as possible.
The Tokyo forex market hours clock starts ticking at 23:00 GMT, two hours after the Sydney market opens. By the time Tokyo traders come in, the liquidity improves considerably, and the spreads won’t be as wide anymore.
Tokyo’s market hours continue until 07:00 GMT, overlapping for seven hours with Sydney’s forex trading hours. If there’s such a thing as the best time to trade in Asia, those seven hours when Sydney’s and Tokyo’s markets overlap fulfill the criteria.
Most Important Forex Trading Hours
With London, the most important financial center in the world, the opening of business in the City of London is closely watched by traders. If there’s a time for the market to move, this is it.
London’s forex market hours start at 07:00 GMT and end at 15:00 GMT. During this period, the price action experiences increased volatility and many times the trends in the Asian session are entirely reversed.
However, the most crucial forex trading hour overlaps are when the London and New York business hours do. New York opens for trading at 12:00 GMT until 20:00 GMT, wherein North American traders dictate price action, especially after the London traders “go home.”
So, when is the market most active? That would be the forex trading hours common to both the London and New York sessions. More precisely, between 12:00 and 15:00 GMT every trading day, the market is most active as the most important financial centers are open to business.
There is also a forex market hours indicator which is easily imported and installed on any MT4 trading platform. It will tell you when a financial center opens and when the market is most active.
Fixing Times in Various Trading Sessions
By now it is evident that we talk about three prime trading sessions: Asia, London, and New York. With the most important economic data coming out London and New York it is no wonder that the two trading sessions are responsible for the most substantial volume in the FX market.
During these three sessions, fixing times concentrate the most of the FX market’s volatility. The most influential one, when options in the regular option market expire and when volatility reaches the highest point is the fixing that corresponds to the overlapping between the New York and London session.
More precisely, at 15:00 GMT, the essential fixing of the trading day takes place. Often, in the last minutes of the hour, the market jumps or tanks significantly, discounting the entire trading day’s move completely.
Fixing times grow in importance as the end of the week and month comes along. Hence, Friday fixing always attracts more volatility as the weekly fix in the FX market. Moreover, the monthly fix that comes on the last trading day of the month will generate erratic moves on the FX market too.
Besides the 15:00 GMT fix, the four hours before and after are considered secondary fixing hours. Typically, they’ll correspond to various overlapping timings between two trading sessions/financial centers.
News Trading in Various Trading Sessions
During each trading sessions forex market hours, economic news comes out, reflecting the evolution of various economies around the world. Because forex trading is merely a comparison of various economic and monetary policies around the world, it is no wonder that the economic news is responsible for most of its volatility.
Economic Data to Watch During Asian Forex Market Hours
It all comes down to Australia and Japan. As the JPY (Japanese Yen) and the (AUD) Australian dollar are a dominant presence on the forex dashboard, news coming from these two countries influences their movement.
Also, the NZD (New Zealand dollar) is popular among forex retail traders, but the economy is mostly a regional one. However, because brokers require little margin to trade the NZD, it became popular for retail traders to open positions on the NZD pairs.
Whatever the Bank of Japan says or does moves the JPY. Hence, look for Bank of Japan monetary policy decisions as well as press conferences to move the JPY pairs.
Recently, the bank of Japan added a new tool to its monetary policy arsenal: forward guidance. As such, expect more volatility in the Asian session as Bank of Japan announces changes in the monetary policy’s direction.
The Tankan report is a comprehensive one showing the state of the Japanese economy. As one of the largest economies in the world, it tells much about the global economic strength and the particularities in Japan. The JPY and the entire forex market will move accordingly during the Asian session when news from Japan is due.
Inflation or the CPI (Consumer Price Index) from Australia, New Zealand and Japan comes next. As all central banks have their mandate revolving inflation, the increase or decrease in inflation levels will result in increased volatility during Asian forex trading hours.
Still, in Asia, all news coming from the RBA (Reserve Bank of Australia) and the RBNZ (Reserve Bank of New Zealand) that potentially impacts the interest rate, will impact the FX market.
Economic Data During London Forex Trading Hours
The London sessions volatility is highly dependent on the economic data coming out of both Europe and the United States. Most of the United States data comes out before the London session ends, so the impact on prices is tremendous.
Here we should split the data into three regions: Europe, the United Kingdom, and the United States.
With the USD as the world’s reserve currency, all FX activity depends on what the USD does. As the main currency responsible for a big part of international trade, the USD’s interest rate drives its value up or down.
Hence, look for the economic news that impacts the Fed’s monetary policy to drive flows into or out of the USD. Such news refers to CPI, GBP (Gross Domestic Product), ISM Manufacturing and Non-Manufacturing, housing and jobs data, and so on.
From Europe, look for Eurozone data to mainly affect the volatility. Inflation, GDP, PMI Manufacturing and Services, IFO in Germany, and general ECB (European Central Bank) interest rate decisions and comments affect the volatility during the London forex market hours.
Also, data from other European countries not part of the Eurozone, like Switzerland, for instance, will influence the regional currencies like the CHF (Swiss Franc).
News from the United Kingdom makes a big impact during London forex trading hours, it starts with the CPI and ends with the Bank of England interest rate decision and monetary policy. In between the two, the news referring to jobs data, PMI Manufacturing, Services, and Construction, etc., is closely watched by traders.
Economic Data During New York Forex Trading Hours
This part of the article refers only to economic news and data released after the London session ends. Typically, the FOMC’s (Federal Open Market Committee) Statement and Minutes come out late in the North American session, and London is out at that time.
Nevertheless, as the United States is the largest economy in the world and the USD the world’s reserve currency, the entire trading community is active when the Fed discusses monetary policy.
Traders that have a deep understanding of forex trading hours and how the currency market unfolds, have more significant chances to survive in the long run. It makes no sense, for instance, to set a one-hundred pips take-profit level on a trade during the Asian session as the chances are that the market just won’t move that much, regardless the currency pair.
Hence, knowing the forex market hours and associating them with the expected volatility and liquidity gives traders a competitive advantage. Each trading session has its particularities. Because the market is open five trading days a week, continuously, some traders find it difficult to adapt.
When compared to other financial markets, the forex market is the most challenging one. It is the most volatile and competitive market in the world, and this is overwhelming for many traders. However, if there is a place full of opportunities in the trading world, that’s the FX market. Free-floating currencies are difficult to manipulate due to the large volume, and such the FX is a leveling field for all kinds of traders.
Institutional investors, professional and rookie retail traders, central and commercial banks alike, they all come to the market with the same purpose: to make a profit. Fortunately, the interbank market is big enough for everyone to profit. Albeit, only the ones that understand its particularities will survive in the long run. Are you one of them?