30 March 2019

Timing Can Be Everything: When to Trade Forex

Timing Can Be Everything: When to Trade Forex

As an ‘open all hours’ trading platform, the forex market is readily accessible as and when you want it to be. However, this can easily be just as much of a curse as it is a blessing. So, before you go delving into your next trade at all hours of the day and night, we’re offering you some of our top forex trading tips and strategies to ensure you don’t deplete your reserves too quickly, cashing in at the right time to ensure forex success. After all, timing can be everything.

What time does the forex market open?

As an interconnected global trading platform, the forex market must accommodate time zones across the world. As such, the market opening hours are dictated by four major time zones, allowing trading windows to remain consistently open. In SAST, the market opening times within these four time zones are:

  • London – 10am
  • New York – 3pm
  • Sydney – 12pm
  • Tokyo – 2am
What time does the forex market close?

Within these time zones, the forex market closes at (times given in SAST):

  • London – 5pm
  • New York – 10pm
  • Sydney – 7am
  • Tokyo – 9am
What time does forex trading start on Saturday and Sunday?

The forex market isn’t open on weekends, with the week’s last opportunity for trading coming in the closing hours of the Tokyo window. As such, foreign exchange trading is a 24/5 market.

When’s the best time to trade?

With the market hours now established, it’s time to turn your attention to timing trades, adapting your forex trading strategies to capitalise on peak trading times and profitable opportunities.

By incorporating various global time zones, there are subsequent overlaps in market windows – for those in the know about how to trade currency effectively, these overlap windows provide a prosperous opportunity for profit. Every weekday, there are three market overlaps (times given in SAST):

  • New York/London (3pm-7pm) – Accounting for over 70% of all trades, this 4 hour overlap is the longest of any crossovers to occur. Subsequently, volatility is often high within this period
  • Sydney/Tokyo (9am-11am) – The Sydney/Tokyo overlap may not be as volatile as the New York/London window due to the EUR and USD being the two most commonly traded currencies, but it still provides ample opportunity to trade in a period with high PIP fluctuation. Our top tip here is trade with one of the window’s primary currencies
  • London/Tokyo (8am-9am) – This small, 1 hour overlap gives little opportunity to observe significant PIP fluctuation, thus seeing the fewest amount of trades

More often than not, the best time to trade is when the market is at its most active. Activity often peaks during these overlaps, where heightened trading frequency results in greater fluctuation in pairings.

Which window is right for me?

As a rule of thumb, your market choice should be predominantly influenced by your choice in base currency. There are advantages to each, however:

  • London – As the trading capital of the world, London trading platforms experience just over a third of all global trades. As such, busy market activity is all but guaranteed during these hours of operation
  • New York – Laying claim to the world’s second largest forex hub, the New York market receives significant attention from foreign investors due to the sheer number of trades that deal with the USD
  • Tokyo – Be sure to look out for GBP/JPY, GBP/CHF and USD/JPY pairings within this window, with the latter performing particularly well during Tokyo hours of operation. This is predominantly a result of the large scale influence the Bank on Japan has on global exchange rates
  • Sydney – Although this is the smallest of the four ‘mega-markets’, this window initially experiences significant rates of activity due to being the first of the markets to reopen after the weekend

So, with all that in mind, when’s the best time for you to start trading? Our free industry seminar can help you put theory into practice, ensuring you have all the relevant forex know-how to begin a profitable trading adventure – sign up right here.