Forex trading can be overwhelming when you’re just starting out. With the market open 24 hours a day and five days a week, many beginners fall into the trap of monitoring various economic calendars and chasing every economic update. This leads to burnout quickly.
Forex market hours are broken up into four major trading sessions, which allows around-the-clock trading. This means you don’t have to stay up all night. By simply understanding the market hours and focusing on key events, you can earn a profit while working on a healthier schedule. In this article, we have discussed some of the best times of the day to trade.
The Four Major Forex Sessions
- New York Session (8 a.m. – 5 p.m. EST)
As the U.S. dollar is on one side of 88% trades worldwide. This makes New York the second-largest forex market in the world. If you’re trading USD pairs, like EUR/USD, this forex market can have a powerful effect.
- Tokyo Session (7 p.m. – 4 a.m. EST)
The Bank of Japan is known for its strong influence over monetary policy, which makes the USD/JPY pair a go-to choice during these forex market hours. This pair offers good opportunities for traders who prefer less sudden movement
- Sydney Session (5 p.m. – 2 a.m. EST)
Sydney may be the smallest of the four sessions, but it sees a lot of initial action. The week technically begins here, late Sunday afternoon U.S. time, as traders and institutions get back into action after the weekend break.
- London Session (3 a.m. – 12 p.m. EST)
About 38% of all global forex transactions happen here, making it the most important session for many traders. The Bank of England’s policies, interest rate changes, and European news all feed into strong market moves.
Overlaps: The Best Hours to Trade
Here are some key overlaps when trading volume and volatility peak.
U.S. / London Overlap (8 a.m. – 12 p.m. EST)
It is considered the golden window for forex trading. Around 58% of daily forex traders take place in these two markets. This makes the U.S. / London overlap the most liquid and closely watched time period for many currency traders. The U.S dollar and the U.K. pound are the fourth most actively traded currencies. It offers the increased volatility, the tightest spreads, and the greatest opportunities.
Sydney / Tokyo Overlap (2 a.m. – 4 a.m. EST)
This overlap is not as volatile as the U.S./London overlap. But it can still make noticeable movement, especially in pairs like EUR/JPY. As these currencies are closely tied to their regions, the overlap gives traders a chance to capture moderate volatility.
London / Tokyo Overlap (3 a.m. – 4 a.m. EST)
This is the least active of the overlaps. It only lasts an hour, and with most U.S. traders asleep, there’s less participation. It gives few opportunities for large moves.
If you’re in the U.S. and want strong activity, target the New York/London overlap in the morning. If you’re a night owl or in Asia, the Tokyo session may suit you better. If you prefer calmer markets, Sydney and Tokyo provide steadier and less volatile moves.
