Forex signals and markets work differently than regular currency exchanges because it’s more active and volatile. The minutes and even seconds make the price difference, so you need to grab good chances to make a profit. The forex market stays active and works as a bridge between different time zones. For instance, if you buy any product from other countries, you can make a transaction through the forex market. Apart from this, it’s an excellent place to make a profit by taking forex trades. But timing is extremely vital in this field, and you must be cautious. So, let’s learn how timing will help to make a profit.
What is meant by forex trading hours?
We already mentioned that the forex market works 24 hours, but it remains close during the weekend. The forex market works on a decentralized system, and you can operate transactions from all over the world. However, for better understanding, the forex market is broken down into the following significant sessions:
- Sydney
- Tokyo
- New York
- And London
These are huge and popular centers of forex trading and deal with almost 75% of transaction volume daily. If the Tokyo session stops working, then the New York or London one will start working. So, in this way the market follows a cycle where the market operates 24 hours a day. But on weekends, the market remains quiet.
Importance of forex trading timing:
The forex trading timing is of immense importance because it works 24 hours a day. The market remains active irrespective of geographic or timing differences. But the primarily available currency pairs see more volume in a transaction. For instance, GBP/USD is hot pairs that see more volume in trades. Still, the trading session becomes more active when a significant financial institute like a bank is active.
What is the best time to act on forex signals?
If you are going to join forex trading, then timing is crucial. There is always a good time that will help you to make more profit. For instance, there are good and not so good times of taking trades. So, if you want to ensure the time is good, then take help from this guide to know the operating hours of the world’s largest markets:
| Forex market | Operating hours |
| London | 3 AM-12 PM (Noon) |
| New York | 8 AM-5 PM |
| Sydney | 5 PM-12 AM (Midnight) |
| Tokyo | 7 PM-4 AM |
However, all exchanges work independently, and you can take trade in any pair of the currency. But at the same time, if two exchanges are open, buying and selling volume significantly increases. Due to this, the bids convert on other available exchanges. However, this increases the market spread and volatility in the following windows:
- 8 AM-Noon, New York and London exchanges remain open
- 7 PM-2 AM Tokyo & Sydney exchanges open
- 3 AM-4 AM Tokyo & London exchanges open
The New York exchange is most important for foreign investors, and trades on this exchange mostly happen in dollars. However, the trading volume on this exchange reaches up to 90%, and dollar movement has a substantial impact on the trades.
Change of schedule of trading sessions:
In standard terms, we call it daylight savings. But the trading session schedule changes according to the months. So, here is the detail that shows the change of schedule:
| The summer period stays from April-October | The winter period lasts from October-April |
However, the timing of each session is different from the other one, and you should act according to that. It may seem confusing, but you can check Google to know more about the forex trading hours sessions and their timings.
Best time to take trade:
Morning routine and trading time is different for all traders. But you should set your schedule according to the operating hours of market sessions. If you are a position or swing trader, then the best trading time doesn’t matter for you. But if you handle short-term trades, then the following points may help you take the trade-in best time.
Monday afternoon:
Monday morning isn’t a good time to get into any trade. But Monday afternoon may be an ideal time to find a profitable trade. It happens because on Monday afternoon the market starts catching pace, and it can’t reach a liquidity level during this time. So, it’s always better to take a trade when the market is at its peak.
When market session timing overlaps:
London is one of the busiest trading markets and isn’t far behind New York. So, in this scenario, there is an enormous possibility of market overlap, and this opportunity provides a massive chance of making a profit. According to professional traders, 14:00 GMT is the best time to enter the market. The London market was about to shut down, and traders shifted towards the New York market. Thus, the price movements sometimes could be risky or profitable. Apart from this, another overlap of the Sydney and Tokyo markets happens from 12:00 GMT & 7:00 GMT. But this overlap isn’t as good as the New York ones, but it may give you profit.
High liquidity time:
Tuesday to Thursday are the days of high liquidity. If you notice deep down, then the forex market remains active during the middle of the week. So, if you plan to make a trade, then high liquidity time is preferable because currently, trading activity has peaked.
London session:
Earlier, we mentioned the London forex market is the second busiest after New York. So, this session provides you an opportunity to make a profit. Above all, this session is listed on European sessions, and in peak sessions, most of the trades happen using this window. Apart from this, the following chart is also providing you the overlapping timing of different exchanges:
| Overlap timing (GMT) | Overlap of exchanges |
| 1 PM-4 PM | New York & London exchange overlap |
| 12 AM-7 AM | Tokyo & Sydney exchanges remain open |
| 8 AM-9 AM | Tokyo & London exchanges are open |
Apart from this, EUR/USD, GBP/USD, & USD/JPY are three good currency pairs that traders use to trade. So, your profitability ratio also depends on the currency pair you are looking at.
Worst times to take trade:
If you know the right time to take a trade, you should be aware of the not-so-good time to take the trade. So, here are the following conditions when you should stay away from taking trades.
- Late Sunday or early morning of Monday
- Don’t get into any trade on national holidays
- Stay away from trades when major news comes your way because it can result in a crashed market.
- If the prices are taking strange action or way
- Don’t take a trade when the liquidity of Asian sessions is lower.
So, keep your eyes open and stay updated on recent updates and noteworthy news, apart from the best timing. For instance, financial news organizations, US trade balance reports, and foreign economic reports play a significant role in defining market momentum. These are the main factors that come together to decide your profit or loss during the trade. So, always stick with a strategy and build your success in forex trading on a solid foundation.