With an average daily trading volume of $5.3 trillion, the foreign exchange market is the most liquid financial market in the whole world. There is no central physical exchange where currencies may be exchanged since forex is an over-the-counter commodity, unlike stocks that are traded on several stock exchanges.
Large banks function as market makers and set their own pricing on the interbank foreign currency market. In contrast to stock market trading hours, which are restricted to a daily schedule with set hours, there are less trading limitations as a result, such as when and where you may trade.
Forex Trading Hours Worldwide
From Sunday evening until Friday evening, the foreign currency market is operating around-the-clock. This is because you may trade at any time of day because to the many foreign time zones. The following three sites’ regular trade hours:
- Tokyo (Asian session)
- London (European session)
- New York (North American session)
When does the foreign exchange market start trading?
The foreign currency market is open 24 hours a day from 5 p.m. on Sunday to 4 p.m. on Friday due to various time zones throughout the globe. This provides several trading possibilities, although particular periods of the day, such as the 8am to noon crossover on the New York and London markets, are more volatile.
The Tokyo session begins at 12 a.m. UK time in the fall and winter and concludes at 9 a.m. One-fifth of all foreign currency transactions occur during this conference, making it one of the world’s major foreign exchange trading hubs. The Japanese yen and currency pairings from the Asia Pacific, notably AUD/USD, are anticipated to see more volatility throughout the Asian session.
Around 35% of all FX deals (or an estimated £2.1 trillion per day) take place on the London FX market, which opens at 8 am UK time. Due to increased liquidity brought on by strong volumes during the London session, forex spreads may be lower. The optimum time to trade large currency pairs, which provide narrow spreads owing to huge volumes, is often during the London trading session, which is also susceptible to significant volatility. The meeting finishes at 4:00 PM.
A 24-hour cycle of foreign currency trading is completed when the Sydney foreign exchange market is open from 8:00 p.m. to 5:00 a.m. UK time.
What time should you trade forex?
The most active period of the market, or the period with the highest trading volume, is considered the legitimate time for foreign currency trading. High liquidity and narrower spreads are offered in such an environment. Therefore, the optimal time to trade is when open marketplaces overlap. The conferences in London and New York had the most overlap.
Major economic news releases may initially drive spreads to shrink, but since volatility is also strong at this time, spreads might eventually rise. High volatility, however, might be advantageous when investing on the foreign currency market.
The London market is also the busiest of all of them, particularly during the week. However, there were fewer deals and less liquidity on Friday, which resulted in less erratic trading. Additionally, it depends on the currency pair you are trading. For instance, trading the Japanese yen during Asian hours might be more suitable. Utilize a spread betting or CFD trading demo account to practice currency trading.
