Forex Market Hours and The 3 Major Forex Sessions
The Foreign exchange is a 24 hours market; it opens on Sunday night (5 PM EST) and closes on Friday afternoon (4PM EST) - open 5 and a half days a week.
However, even though the Foreign exchange market is open 24 hours a day, as an investor you need to realize that certain times of day are more suitable than others in order to devise an effective and time-efficient currency trading strategy.
To maximize the number of trading opportunities during these Forex hours, it is important to be aware of the times when the market is busiest. This is the time that most currency transaction activity occurs.
Even though there is no official open and close time during the week, it can be broken up into 3 major Forex sessions - Tokyo, London and New York sessions.
However, although it seems not to be very important at the beginning, the right time to trade is one of the most crucial points required to be a successful investor.
The best time is when the market is most active and therefore has the biggest volume of transactions. A more active market creates a good chance to make some profit while a calm and slow one is literally a waste of time - turn off your computer and don't even bother trading currencies at this time.
Not all the times are suitable, that's because the volatility changes too much during the 24 hours. Below is a table outlining the schedule of Forex Sessions. The time used is GMT 0
The 3 major sessions are:
- Asian Session Hours( Tokyo ): 00:00 - 9:00 GMT
- European Session Hours ( London ): 7:00 - 17:00 GMT
- U.S. Session Hours( New York ): 13:00 - 22:00 GMT
Forex Sessions Overlaps - Best Trading Times
There are hours when two sessions are overlapped:
London + Tokyo overlap - 7:00 - 9:00 GMT
New York + London overlap - 13:00 - 17:00 GMT
At these overlapping market hours you will find the highest volume of currency transactions and therefore more chances to win during these hours.
For example, the EURUSD and GBPUSD currency pairs would give good results between 13:00 - 17:00 GMT when two sessions of Europe and USA for those currencies are open.
This means that the lion share of currency exchange transactions is happening between the London session and US sessions. Naturally this is the best time to make profits.
The currencyprices moves a lot during the New York and London Sessions because Multinational companies, hedge funds, managed funds and banks are open for transacting.
Multinationals will transact currencies during this time to facilitate international business transactions and commerce, hedge funds and managed funds will trade currencies for investment purposes, banks on the other hand will exchange a lot of money on behalf of their clients, maybe tourists wanting to travel around the globe or just anyone wanting to exchange money so as to buy something in another country or make some transaction.
This makes the market very liquid at this time and the high volume of transactions means that currencies prices move a lot. at this time the currencies will generally move in particular direction and form a short term trend.
As a trader you also want to join in when everyone is placing their orders as this is the time there is enough liquidity and many good opportunities to make money, and because there is a lot of liquidity the currency movement will generally be more predictable unlike when there is little liquidity and the currency movement becomes unpredictable and the prices can move in a range bound with no particular direction.
Once you transact currencies for a while you will get to know that is easier to make money when the market is moving up or moving down, unlike when it is in a range.
Asian Session Characteristics:
- Least volatile of the three sessions
- Account for 15% of daily transaction turnover
- Typical 20 -30 pip moves
European Session Characteristics:
- Most volatile of the three sessions
- 35% of daily transaction volume
- Typical 90 -150 pip moves
US Session Characteristics:
- 2nd most volatile of the three sessions
- Accounts for 25% of daily turnover
- Focuses on US economic news
US and Europe Session Overlaps Characteristics:
- Combines the two most volatile trading sessions
- Accounts for 60% of total daily transaction turnover
- Focuses on USA and European economic news
- Fast moving currency prices and currency pair trends in a particular direction
- Typical 100 -150 pip moves for major currency pairs