The Forex market offers traders many advantages over other financial arenas. These include high potential for profitability, flexible trading locations, the ability to capitalize on a bullish and bearish market, and most of all the Forex market hours, which are virtually endless and constant.
While the Forex market hours are not limited to one time slot or another, and traders can really open positions almost any time they want, there are certain Forex market hours that are optimal for trading.
One of the most blatant characteristics of the Forex market is volatility. What that means is that the market is always moving and moving fast. This has direct consequences for the Forex trader looking to make money. All a trader needs to do is be in the right place at the right time and the market can shoot in any direction, which will lead to major profits. This, however, very much depends on Forex market hours.
One other great aspect of Forex trading is that you can profit whether the market is going up or down, but if the market is not moving at all, then obviously there will be no profits. For this reason, Forex market hours are so crucial.
If you open a position when there is limited movement in the market, the volatility will be minimal and as a result, so will your profits. If however, you open a position in Forex market hours that are busy, the volatility will be up, and as you probably guessed, so will your profits.
Of course, just like everything in life, the higher the risk, the higher the reward. In this case, the higher the reward, the higher the risk. Are you confused? What I mean to say is, yes, if there is high volatility, you can make more money, but you can also lose it just as fast if the market moves against you. Trading carefully and professionally is a topic for another time, so we will leave that alone now and focus on the best Forex market hours to trade.
To better understand the best Forex market hours to trade, let's first talk about the best and worst days to trade. It has been proven time and time again that the Forex market is most active in the middle of the week. This is true across all major pairs
When trading Forex, the weekend starts early and the market is only busy for half of the average Friday and then calms down once 12 PM EST arrives. The market closes at 5 PM EST. Holidays, weekends, and days with major news reports are some examples of Forex market hours you want to stay away from.
In terms of actual Forex market hours, there are three trading sessions in the Forex market, the Tokyo session (7pm -4am EST), the London session (3am-12pm EST), and the US session (8am-5pm EST). The premise is simple. You need to find times in which multiple sessions overlap so there is the maximum activity in the market.
Yes, we will spell it out for you, don't worry. The time slots in which Forex market hours of multiple sessions overlap are as follows:
• 3-4am EST: Tokyo and London are open
• 8-12pm EST: London and US are open
Of course, this does not mean you should not trade beyond these time slots, but these specific time frames might produce higher volatility and profits for the average trader.
By: Sara Patterson
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