The Forex market is a global and dynamic market. Due to the fact that it is spread over several time zones, it is essentially a 24 hours market.
It is also this characteristic that gives the Forex market its liquidity.
Traders from all over the world are generally able to trade any time to try to pull some profits from the constant price oscillations that are occurring.
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As mentioned earlier, the Forex market covers several time zones.
Knowing these time zone overlaps helps you to decide the best time to trade Forex.
Basically, trading activities starts in New Zealand, Australia, Asia, Europe and the Middle East respectively and ends in the Americas. The opening trading times of the major market based on Greenwich Mean Time (GMT) are listed below as:
- Sydney Market: 10pm-7am
- New York Market: 1pm-10pm
- London Market: 8am-5pm
- Tokyo Market: Midnight-9am
In addition to this fact, the bulk of the Forex trading volume originate from the European and US accounts. Together, these two regions account for more than 50% of the Forex market transactions. Therefore, the heaviest trading activities occur when the US market trading hours overlap those with the European market trading hours.
Forex – a 24 Hour Market
No doubt in the Forex market, there is always someone buying and selling currencies somewhere in the world when one market open and another market closes.
Nevertheless, from above observation, it is obvious that one of the best times to trade Forex is when the Forex transaction is heaviest and when the both European and US markets overlap in their trading hours. This occurs between 1pm and 5 pm GMT.
Below is a schedule of overlapping trading hours of each of the major markets from around the world:
As can be seen from the above schedule, there are three periods where the trading zones overlap between markets. These are indicated by a bright yellow colour behind the GMT times on the left hand column.
An overlap between the Australia and Japan market occurs between midnight and 6am GMT. A brief overlap of the Japan and UK market occurs between 8am and 9am.
Finally the most major overlap in terms of trading activity occurs when the UK and US markets overlap between 1pm and 5pm GMT.
Thus, any traders who wish to find the most profitable trading hours should try to trade during these times where the major markets starts to overlap. In short, these times represent the best time to trade Forex.
Using the chart above you can see that Forex truly is a 24 hour market and whilst the best time to trade Forex is usually when markets overlap, profit can still be made at any time of day that you feel like trading.