Knowing what the best times to trade Forex are is a crucial component
to effective and efficient Forex trading. During the trading week the
Forex market is open 24 hours a day, but just because it is open
around the clock does not mean prices are always moving in a way that
makes a particular market worth trading. Money is made in the Forex
market when the market is volatile and moving, not when the market is
calm and relatively quiet.
So, as a Forex trader you need to know when the most active Forex
trading times are, as this will aid you greatly in the timing of both
your entries and your exits as you trade the markets. The two most
active Forex trading sessions are the London session and the New York
session, during these sessions price action provides the best trading
environment. The Asian trading session is often less volatile and thus
less likely to result in major moves within the various Forex pairs.
The Forex market contains three distinct trading sessions; trading
starts in Australia and Asia, and moves around the globe into Europe
and finally ending the day in North America as trading closes each day
in New York. The various Forex trading hours are as follows:
• Asian trading session (including Australia and New Zealand): the
Asian trading session opens at 6:00pm EST and closes at 4:00am EST
• London trading session: the London trading session opens at 3:00am
EST and closes at 12:00pm EST.
• New York trading session: the New York trading session opens at
8:00am EST and closes at 5:00pm EST.
As you can see from the above list of times to trade Forex, there are
periods each day where the sessions over-lap each other. It is within
these periods when volume and volatility typically rise to peak
levels. The London and New York trading sessions over-lap between 8am
and 12pm EST, this is typically considered the best time to trade
Forex. The reason it is considered the best time to trade is because
this is when the world's two most active trading centers cross; as
London trading comes to an end, New York trading is opening, and they
are both open at the same time for 4 hours each trading day. As a
result, many traders strictly trade within this 4 hour window because
it generally brings the best liquidity and volatility.
Beyond knowing the best Forex trading times, it also helps to know
which currency pairs to trade. Generally speaking, the "major" Forex
currency pairs are the best to trade, the reason they are widely
considered to be the best Forex pairs to trade is mainly because they
offer the smallest spreads and highest liquidity. This means you pay
smaller fees to trade the majors and they move in a "safer" manner
than the "exotic" currency pairs, which can tend to jump around and
move a relatively illogical way. In the end, make sure you know the
best times to trade Forex and the best Forex pairs to trade; these are
some of the basics of learning to trade Forex.