What’re the best times to trade Forex? Timing is everything – in life, in business, in love. Being prepared to strike when the opportunity presents itself is essentially the definition of success. Is there a way to ensure that this happens? Yes. By doing everything in your power to be as ready as possible for the right moment.
What’s the best time to trade Forex?
Timing is everything – in life, in business, in love. Being prepared to strike when the opportunity presents itself is essentially the definition of success. Is there a way to ensure that this happens? Yes. By doing everything in your power to be as ready as possible for the right moment.
This mindset perfectly applies to Forex trading. Why?
Because Forex is as time-sensitive as an industry can get. News on business, politics, finance and trade, change the valuation of currencies in split seconds. What that means is that being ready to act upon such volatile instruments is paramount for achieving any success.
How do you stay ready, and what are the secrets for finding the best times to trade Forex?
The answer is overlap. Yes, overlap. Let us explain.
Normal Market Hours
When we refer to Forex trading, we mainly talk about four primary markets:
- New York
These markets trade at different times due to geography and the difference in time zones. Here’s a breakdown of their trading hours in Eastern Standard Time (EST):
- New York (open 8 am to 5 pm)
- Tokyo (open 7 pm to 4 am)
- Sydney (open 5 pm to 2 am)
- London (open 3 am to noon)
Even though we’ve all tried to stay awake for the full 24 hours of the day at least once in our lives, let’s agree that this is not the most effective way to keep up with the market. What can be done, though, is to strategically plan your trading activity at times where these market hours overlap.
The idea is to get involved in trades during the hours that more than one market is open. The best times to trade are evident. Think of it as catching the sunrise, or the sunset only with the prospect of being engaged in meaningful trades. Let’s have a look at these overlaps in more detail.
Tokyo/London Trading Market Overlap
(3 am – 4 am)
Viewed as the lowest impact/lowest traffic overlap session of the lot. The reason is twofold. Firstly, the apparent absence of US-based traders (probably sleeping) from the mix, takes out a lot of steam from the equation. Secondly, the simple fact that overlap only lasts for an hour; it gives little to no time for changes to affect currency pairs.
When you throw in the fact that this is the middle of the night for most European-based traders, it makes it an overall challenging time to trade.
London/New York Trading Market Overlap
The exact opposite of the Tokyo/London overlap session. The time where the consensus two most significant markets are alive and kicking at the same time. Where Forex trading lives and breathes. If you could choose one overlap session to follow and trade, this is the one.
70% of the entire daily volume happens during this session with trends from the European session, taking full effect and carrying their impact in this one. Moreover, this session gets usually dominated by the release of significant reports, reviews and announcements from US and Canadian financial and political governing bodies.
This flow of news and information creates the ideal trading environment as volatility is at its highest.
Sydney/Tokyo Trading Market Overlap
(2 am – 4 am)
If Tokyo/London is the one to avoid, and London/New York is the one to aim for, Sydney/Tokyo is a happy medium. The EUR/JPY and the AUD/JPY are the currency pairs to keep an eye for in this session as the absence of the greenback and the US market in general limits cuts trading choices down.
There you have it. A brief rundown of how to stay on top of the trading game. By knowing the best times to trade. Plan, schedule and set your alarm clocks according to the overlap sessions, and you’re ready to go.
Disclaimer: This article is not investment advice or an investment recommendation and should not consider as such. The information above is not an invitation to trade, and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your investment objectives, financial circumstances or needs.
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