The Trading Sessions
The Forex market is the biggest financial market in the world. Forex is traded between participants over an ECN over numerous locations throughout the world, as opposed to equities which are traded over a central site like the New York Stock Exchange.
In essence, the Forex market is open around-the-clock. It begins on Sunday at 5 p.m. EST and runs through Friday at 4 p.m. As a result, there is always at least one market open, and there are some times during the day when markets overlap.
For international trade (exports, imports, etc.), by central banks, and by multinational corporations, currency is required on a worldwide scale. Since the end of the gold standard in 1971, currencies are especially important to central banks.
- From 5 p.m. EST on Sunday through 4 p.m. EST on Friday, the Forex Market is open around the clock.
- Forex traders can transact throughout a 24-hour period due to differences in local time zones.
- Australia/Asia opens forex trading sessions first, followed by Europe and North America.
- Typically, a new market opens or has already opened while one region's market shuts.
Understanding Forex Time Zone
The forex market has a wide range of participants, including central banks, hedge funds, and retail investors. However, while operating across several time zones, the market can be accessed at any time, barring the weekend.
The foreign exchange market is a worldwide network of brokers and exchanges. The times that trading is allowed in each participating nation determine the forex trading hours.
The following are some standard Forex session times:
- New York 8am to 5pm EST (1pm to 10pm UTC)
- Tokyo 7pm to 4am EST (12am to 9am UTC)
- Sydney 5pm to 2am EST (10pm to 7am UTC)
- London 3am to 12 noon EST (8pm to 5pm UTC)
You can see that between the London and New York sessions are the busiest trading sessions and time zones. That is the time between around 1 p.m. and 5 p.m. UTC in the image above.
There are still some areas that overlap, such as Sydney and Tokyo, even if the other trading sessions and Forex periods have much less liquidity.
If you live in the UK, you can trade throughout the busiest trading period without having to worry about waking up at odd hours. London may then rank among the world's most significant trading hubs.
Trading can be more volatile when there is less liquidity (volume).
Spreads will be higher during periods of lower volume (liquidity), as indicated on the image.
The major currencies are the US dollar, the Euro, the Japanese yen, the British pound, the Australian dollar, the Canadian dollar, and the New Zealand dollar.