Are you planning to start your trading journey and is wondering how to maximize your trading schedule by doing it within the best forex trading hours? Let me share with you the schedule I follow which helped me gain success in earning profit through trading and why it is worth to follow.
What is forex trading?
If you are a trader, for sure you are already aware that forex trading refers to the process of buying and selling currencies in the forex market. Buying and selling may sound simple but the entire process of trading forex is actually more complex than it seems. When an investor trades currencies, he or she is buying one while selling another. These two currencies are then called a currency pair and rates are associated with each one. Usually, traders buy or open a long position when they believe the value of a base currency will increase. On the other hand, they sell or open a short position if the value seems to decrease.
Trading in the forex market is better compared on other financial markets as there is more liquidity, better benefits, and longer trading schedule. However, just like any other forms of trading, forex trading is all about strategizing. A successful trader spent a long time learning about different strategies and is continuously learning all throughout his or her journey. One aspect of strategizing is timing. In order to be successful, a trader shall learn how the market schedule works and how to use it for his or her benefit.
How the forex market schedule works
The forex market is the largest financial market in the world where currencies are being traded or exchanged with one another. It determines foreign exchange rates for every currency. Institutions, investment banks, commercial banks, and retail investors serve as participants in the market who transacts electronically over-the-counter. What makes it unique among the world’s financial markets is that it is open 24 hours a day, 5 days a week.
Forex market hours are broken up into four major trading sessions: Sydney, Tokyo, London and New York. These are the largest trading where major forex exchanges are located and are happening. Basically, the market is open from 10pm (UTC) on Sunday – when the Sydney session starts – to 10pm on Friday when the New York session closes for the weekend. Trading volume and volatility increases when more than one exchange is open at the same time. Greater volatility means greater opportunities because it equates to a higher extent and rate at which equity or currency prices change.
Based on the four major trading sessions, the four most important time windows (EST) are as follows (balance.com):
- London: 3 a.m. to 12 p.m. (noon)
- New York: 8 a.m. to 5 p.m.
- Sydney: 5 p.m. to 12 a.m. (midnight)
- Tokyo: 7 p.m. to 4 a.m.
What is the best time to trade in the forex market?
Not every hour of every day is equally good for trading in the market. The best time to trade forex is when the market is busiest or most active. This is when spreads are narrowest and volatility is high which means a trader has the best chance to place a trade at his or her desired levels. Specifically, the market is most active when two exchanges are open or when market hours overlap over sessions.
The overlap windows for exchanges are (forex.com):
- 1 pm to 4 pm (GMT) or 8 am to noon (EST) when both New York and London exchanges are open. This is when and where the heaviest overlap within the markets occurs and the most optimal time to trade.
- 12 am to 7 am (GMT) or 2 am to 4 am (EST) when both Tokyo and Sydney exchanges are open. It may not be as volatile as the first one so you should aim for the EUR/JPY currency pair which is ideally the best for this time period.
- 8 am to 9 am (GMT) or 3 am to 4 am (EST) when both Tokyo and London exchanges are open.
Accordingly, the best time for a specific trader to trade forex will depend on which currency pair he/she is looking at (forex.com). As a rule, the most liquidity for each FX pair will occur when the sessions for the pair overlap – if both locations are open at the same time. Personally (I live in the US), I usually place my trades between 5:00 am to 11:30 am during Mondays to Thursdays. I also make the most out of the overlap of London and New York as I am one of those traders who consider liquidity (volatility) as an advantage.
Why is proper timing important?
Taking note of market overlaps and being updated on news releases is essential in establishing your trading schedule because it helps you maximize your profit opportunities and save time. Not all traders are free to trade all day long as some have regular jobs and or other responsibilities to take care of. Proper timing in the way you trade in the forex market allows you to balance your time depending on whether you are a part-time or full-time trader, and enhance your profits at the same time.
Start trading within the best hours!
The trading schedule I follow has helped me grow and gain success all throughout my trading journey. It is not only strategic in terms of how the market works, but it also helps me manage my time given that I have a regular job to attend to. Yes, the journey may not be perfect and the progress may not be consistent and linear, but perhaps what makes it work is the constant effort to educate myself and make time for this passion.
If you think that it is also perfect for you, then go and give it a try! My personal schedule may not work for you that is why you need to align it to your individual location, circumstances, and preference. If ever you have questions or need help with anything, just hit me up and I’ll be glad to help. Happy trading, fellow traders!
Let me know about your thoughts and questions by sharing them on the comment section below or by sending me a private message. If you need help with starting out on your trading journey, let me help you with my services so I can share with you my personal tactics that led me to success.