The forex market, also known as the Foreign Exchange market, is a decentralized marketplace that operates on a global scale. Specifically for FX trading, it is a 24hr market staying open for the full 5 weekdays. However, this does not mean that the market is always super active throughout the whole 5 days, and even the market needs a break from the hectic movements. The best times to trade in the forex market typically occur during periods of high liquidity and volatility, which usually happen when the trading hours of major financial centers overlap.
Within the global market, the 4 major forex exchange markets are in London, New York, Sydney, and Tokyo. Within a day, the market can be broken into 3 Major sessions.
They are the Asia Session (comprising Sydney session and Tokyo session), London Session and the New York Session. Sometimes, these 3 major sessions are also referred as Asian, European and North American sessions.
The detailed session times in UTC time are:
Sydney session: 10pm open – 5am close
Tokyo session: 11pm open – 8am close
Asia session: 10pm open – 8am close.
London session: 7am open – 4pm close
New York session: 12pm open – 8pm close
DST (Daylight Saving Time) applies when converting to your local timezone. It is important to remember that Forex market hours change in March, April, October and November as countries enter daylight saving time on different days.
Now the big question is, when is the market busiest(volatile), when is the market quiet.
The market is the most volatile and makes the biggest moves during the overlaps between two sessions. Naturally, as there are two markets open more money(volume) is being dealt with, which creates bigger movements on the charts. Understanding the peak volatility times is essential for any Forex market trader.
For example, during the London and New York session you will see a lot more trending markets, either an uptrend, downtrend or even both. Specifically, during the overlap between these two times you will see the biggest movement. Scalpers and Day traders thrive in this environment with lots of action. Swing traders and Position traders may not pay too much attention to the session hours as they hold their positions overnight, however it can be found helpful when timing their entries.
We are also developing a session indicator for which traders can utilize the session tool on the charts to quickly identify which session they are currently trading in. It is recommended to view it on the minutes and seconds chart as the volatility is more clearly seen on the lower time frames. Stay tuned by subscribing to our blog.
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Please be mindful that spreads can be significantly wider during holiday periods.
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