FX markets are open 24/5 making them one of the most available markets to trade. However, some hours of the day will generally see more liquidity and volatility in forex pairs. Learn the best times to trade forex for price action. Unlike the stock market which closes for hours each night, forex markets are available to trade for 24 hours most days. This is possible because currency trading involves a network of exchanges operating constantly throughout global market sessions. Open continually from 6 pm EST Sunday to 5 pm EST Friday, forex market hours are among the most unrestricted. Of major asset classes, only crypto (open 24/7) is more accessible. Although forex markets are open 24 hours a day, not all hours experience the same liquidity or volatility within currency pairs.
Trading session overlaps
An important factor for liquidity in forex pairs is major market overlaps. The four major markets and exchanges are Japan (Tokyo), Australia (Sydney), Europe (London), and US (New York). The active hours of each market are as follows.
- Sydney session: 3pm to 12am EST
- Tokyo session: 7pm to 4am EST
- London session: 3am to 11am EST
- New York session: 8am to 5pm EST
Their open hours bring an increase of active traders in their respective regions as they trade stocks, commodities and forex. This activity can often translate directly to activity in regional forex pairs. For example, Australian dollar and Japanese yen may see more trading volume during the Tokyo and Sydney sessions.
This effect tends to compound during hours when two major markets overlap. Early in the morning, from about 2am to 6am EST, Asian and European markets are both open. A few hours later, from around 8am to 12pm, European and US markets overlap.
During these times, traders are buying and selling assets in their own respective currencies as well as trading currencies to participate in both markets. As a result, the busiest period of time for currency pairs like EUR/USD and GBP/USD occurs during the New York session’s overlap with London.
Trading prices and times
The most positive impact of increased liquidity for traders is the decrease in spread. During peak hours, the spread – or difference between bid and ask prices – can be as low as 0.8 pips. For the euro or British pound, this low spread can often be obtained during the London session. For comparison, the spread can be as wide as 30 pips in exotic pairs during quieter hours (often 4pm – 8pm ET). By taking advantage of low spreads, traders need less movement in price to obtain profitability.
Economic data and volatility
In addition to increased liquidity, forex pairs often experience their highest volatility and price movement when local stock markets are open. A key reason for this trend is the timing of economic data releases. Important metrics that help gauge a country’s economic health such as GDP, unemployment and inflation are often released towards the beginning of market hours. Central banks will also meet during their region’s trading session.
For the US, 8:30am and 10am EST are popular times for data releases. European countries often report data from 2am to 5am EST, and Asian countries from 7pm to 11pm ET. For this reason, the US-European session overlap in the morning is generally most influential for forex traders. Increased volatility from European data then rolls into the US trading day and data releases making forex markets liquid and active.
How to trade 24/5
Open an account to get started, or practice on a demo account
Choose your forex trading platform
Open, monitor, and close positions on forex pairs
Trading forex requires an account with a forex broker like IG. Many traders trade US dollar pairs and watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like IG’s Trading Academy. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.