We have covered most of the W’s about the Forex market. Now that you know ‘what’ forex is, ‘why’ to trade in forex, and ‘who’ trades the in this market, it is time to discuss the about ‘when’ you can trade in the forex market.
You must be under the impression that you can trade anytime in the forex market as it is open 24 hours. Well, the market indeed is open 24 hours, but it does not mean you can trade anytime. This is because the forex market isn’t active the entire day. And, if the market isn’t active, you cannot make money as there won’t be any significant moves in the market.
Forex Market Trading Sessions
There are different trading sessions in the forex market. However, we don’t consider the trading sessions of all the countries. Nevertheless, we do focus on four major trading sessions, as the market is super active in these sessions.
The four major trading sessions are:
The Sydney session
The Tokyo session
The London session
The New York session
The open and close time for some sessions varies based on the season. There is one set of timing during Spring/summer and another set during Fall/Winter.
Spring/Summer in the U.S
This starts from March/April and goes on until October/November.
EST – Eastern Standard Time
Fall/Winter in the U.S
Begins from October/November and ends during March/April
If you observe, the actual open and close timings are based on the country’s local business hours, that is, somewhere between 7:00 AM and 6:00 PM.
We can see that in some countries there is variation in the open and close time. This is due to the shift to/from Daylight Saving Time (DST).
From the above table, we can also notice that there is an overlap in the schedules between each trading session. In other words, there is a period of time where two sessions are trading at the same time. For example, during the summer, from 3:00 AM to 4:00 AM EST, the Tokyo session and the London session are both open. Similarly, in winter, from 8:00 AM to 12:00 PM EST, the New York session and the London session overlap.
From this, it is quite obvious that during the overlap hours, the market is extremely liquid and volatile because there is more volume in the market.
Hence, most of the traders prefer trading during these busy hours of the market as they can catch hold of significant moves.