The forex market operates 24 hours a day across five and a half days a week, making it one of the most accessible markets globally. This continuous trading cycle is possible thanks to the decentralised structure of forex, which spans key financial centres in different time zones. However, knowing when to trade can be just as important as knowing how to trade.
Main trading sessions in forex
There are four primary forex trading sessions, each aligned with the business hours of major financial hubs:
- Sydney Session (5:00 pm to 2:00 am EST): As the first session to open, the Sydney session kicks off the trading week and sets the tone for early market activity.
- Tokyo Session (7:00 pm to 4:00 am EST): Overlapping with the Sydney session, the Tokyo session increases liquidity and is particularly active for yen-based pairs.
- London Session (3:00 am to 12:00 pm EST): Known as the most liquid session, London accounts for a large share of global forex transactions. The overlap with both Tokyo and New York sessions makes this window especially important for traders.
- New York Session (8:00 am to 5:00 pm EST): The final major session of the day, New York trading hours are often influenced by economic data releases and major financial news, leading to significant price movements.
How do trading hours affect individual forex pairs?
The timing of your trades can significantly impact performance due to variations in liquidity and volatility during different sessions.
Overlap periods boost liquidity
The periods where trading sessions overlap often produce the highest trading volume. For instance, when London and New York sessions overlap between 8:00 am and 12:00 pm EST, the market experiences heightened volatility and liquidity, creating ideal conditions for active traders. Similarly, the Tokyo-Sydney overlap (7:00 pm – 2:00 am EST) enhances activity in Asia-Pacific pairs like AUD/JPY and AUD/USD.
Session-specific trading characteristics
Each trading session comes with its own rhythm and preferred currency pairs:
- Sydney Session: Best for traders focusing on AUD or NZD-related pairs, such as AUD/USD and NZD/USD, thanks to stronger regional participation.
- Tokyo Session: Brings steady movement and consistent liquidity for JPY-based pairs like USD/JPY and EUR/JPY. Volatility tends to rise during local economic news releases.
- London Session: Responsible for roughly 35% of daily forex turnover, the London session sees major moves in pairs like EUR/USD, GBP/USD, and USD/CHF. Its strong liquidity often drives short-term trends across the market.
Which Forex Market Is Open 24 Hours?
The forex market runs around the clock from Monday through Friday, enabling 24-hour access to currency trading. This continuous operation is made possible by its decentralised structure and the presence of major trading hubs spread across different time zones — namely Sydney, Tokyo, London, and New York. As one session closes, another opens, ensuring there’s always an active market somewhere in the world during the trading week.
Importance Of Liquidity And Volatility
Trading during peak hours gives you access to greater liquidity, which is essential for efficient trade execution, especially for day traders and algorithmic strategies. High liquidity ensures tighter spreads and smoother entry and exit points. When trading sessions overlap, such as London and New York, volatility often surges — providing more opportunities for traders, but also increasing risk levels.
How to trade forex 24/5?
Forex’s 24/5 structure allows traders from across the globe to participate in the market at different times. However, to trade effectively, it’s vital to understand how the trading day is segmented and how to adapt your strategy accordingly.
Leverage the four main trading sessions
Each of the four core sessions offers unique trading characteristics:
- Sydney Session (5:00 pm – 2:00 am EST): Marks the start of the trading week and is most active for AUD-based pairs, reflecting Australia’s market influence.
- Tokyo Session (7:00 pm – 4:00 am EST): Ideal for trading JPY pairs such as USD/JPY and EUR/JPY, driven by Japanese economic data and market sentiment.
- London Session (3:00 am – 12:00 pm EST): The most liquid and active session. Currencies like EUR, GBP, and CHF typically see increased movement.
- New York Session (8:00 am – 5:00 pm EST): Overlapping with the London session, this period is shaped by US economic data releases and features substantial volatility.
Time your trades for high-impact sessions
Maximising trading performance often comes down to when you trade. Here are a few strategies:
- Target session openings: Price action tends to be most active during the first hour of each session, especially at the start of the London session, which frequently sees sharp movements in GBP and EUR pairs.
- Trade around news releases: Key reports such as non-farm payrolls, interest rate decisions, and GDP data are commonly released during the New York session, creating short-term volatility.
Stay informed with economic news
Monitoring real-time financial updates and scheduled economic releases is vital in forex trading. These events can shift sentiment and drive large price swings.
- Track key announcements: Central bank decisions, inflation data, and job numbers are just a few examples of high-impact events.
- Use an economic calendar: Staying organised with a calendar ensures you never miss crucial trading opportunities.
Apply strong risk management
Trading around the clock doesn’t mean ignoring risk. Successful traders manage risk carefully to preserve their capital.
- Use stop-loss orders: Protect your downside with well-placed stop-loss levels.
- Size your positions properly: Base your lot size on account size and risk tolerance, aiming to limit exposure to a small percentage of your capital per trade.
Conclusion
Knowing when to trade in the forex market can make a significant difference in your results. Each trading session presents unique dynamics, and the overlaps between them often offer the most favourable conditions for execution and volatility. By understanding the rhythm of the market, aligning with session-specific strengths, and incorporating solid risk management, you can make the most of the 24/5 trading window. Visit TradeSmart now to put your time to work and trade more strategically.
