Best Hours for Trading Forex
Understanding Forex Market Hours & News Impact
Forex Market Hours: When is the Best Time to Trade?
When I first started trading in the early 2000s, I was living on the East Coast of the United States. I would wake up in the middle of the night to trade because, as a day trader, I needed to be active when the market was moving the most.
Get my 5-Day Trading Mini-Course
The forex market is open 24 hours a day, five days a week, starting on Sunday in Australia and closing on Friday in Australia. However, this doesn’t mean that the market is equally active at all hours. Understanding forex market hours is key to knowing when to trade.
Forex Market Sessions (Eastern Time)
5:00 p.m. – 6:00 p.m. → Market "close" (although forex never truly closes)
2:00 a.m. – 3:00 a.m. → Market "open" as London traders arrive
3:00 a.m. – 8:00 a.m. → The most active period (London session)
9:00 a.m. – 10:00 a.m. → London slows down
10:00 a.m. – 5:00 p.m. → A slower market (U.S. session dominates)
The busiest and most volatile times in the forex market occur when major financial hubs are active, particularly London and New York. During these periods, liquidity is high, and price movements tend to be more significant.
The Three Forex Trading Sessions
Asian Session (Tokyo & Sydney) – Low Volatility
This session is usually slow because most of the world's traders are not yet active.
Traders refer to it as the "quiet session."
Best for range-bound trading strategies.
European Session (London & Frankfurt) – High Volatility
Starts around 2:00 a.m. – 3:00 a.m. Eastern Time when traders in London and Frankfurt arrive.
Most trading volume happens here, making it the most liquid session.
Ideal for day traders and scalpers.
U.S. Session (New York) – Moderate Volatility
Starts around 7:00 a.m. – 7:30 a.m. Eastern Time.
Overlaps with the London session, creating an active market.
Slows down after 10:00 a.m. when London traders start leaving.
Still provides trading opportunities, but not as volatile as London.
How News Events Affect Forex Trading
One of the biggest drivers of forex market volatility is economic news releases. News creates movement, and movement is what traders seek.
Key Economic Reports That Impact Forex
Employment reports (e.g., U.S. Non-Farm Payrolls)
Interest rate decisions (Federal Reserve, ECB, BoE, etc.)
Consumer Price Index (CPI) – Inflation data
Gross Domestic Product (GDP) growth reports
Trade balance reports
Traders track these reports using economic calendars. One of the best sites for this is ForexFactory.com, which provides a schedule of upcoming reports and their expected impact.
How to Read an Economic Calendar
Look for reports marked in red (high-impact).
Focus on major economies: U.S., Eurozone, UK, Japan, Canada, Australia.
Compare actual data vs. forecasted data.
A big difference between the expected and actual result can cause huge price swings.
Can You Predict News Impact?
Many traders try to trade based on expected news outcomes, but the reality is:
News acts as a catalyst for movement.
Markets don’t always react logically.
Even a "positive" report for a currency might make it drop due to profit-taking or other macroeconomic reasons.
Get my 5-Day Trading Mini-Course
How to Use Market Hours & News to Your Advantage
If you're a day trader: Focus on the London session or the London-New York overlap.
If you prefer stability: The Asian session is best for slower, range-bound strategies.
For news traders: Pay attention to high-impact economic releases and avoid trading right before the news to prevent slippage.
Understanding forex market hours and news impact can significantly improve your trading strategy. Stay informed, trade smart, and always manage your risk properly.
Disclaimer: Trading involves risk, and it’s possible to lose money. Always trade responsibly and seek professional advice if needed.
Comments
Post a Comment