The best time to trade forex market currency pairs

Analyzing the best time to trade different currency pairs in the forex market

The best time to trade various currency pairs in the forex market is different, and Understanding it can completely change a trading strategy's profitable outcome. The forex market is a decentralized global market that operates 24/5. However, because the world's major financial centers are in different time zones, the forex market is not always equally active, and that is why knowing the best time to trade various currency pairs is essential to gain more trading opportunities.

In this article:

Forex Market Trading Sessions

The forex market has four main trading sessions :

These sessions overlap at certain times, creating greater trading activity and liquidity periods. Further, we will discuss the best time to trade different forex currency pairs based on these periods in detail.

Sydney Session: The Sydney session is the first trading period to start and starts at 10:00 GMT. This time frame is less volatile than other sessions, but it is still significant because it determines the overall state of the markets starting. The main currency pairs related to the Australian dollar, such as AUD/USD and AUD/JPY, have the most activity in this session, so the best time to trade these currency pairs is the Sydney session.

Tokyo Session: The Tokyo session starts at 11:00 GMT and is often known as the Asian session. This period overlaps with the Sydney session for a few hours and increases trading activity. Major currency pairs that include the Japanese yen, such as USD/JPY and EUR/JPY, are the most active in this session. The volatility of these currency pairs increases during the Japanese economic news release. So, the best time to trade yen against other currencies is the Tokyo session, especially on important days in the economic calendar.

London session: The London session is known as the most active and liquid session in the forex market. It starts at 07:00 GMT and overlaps with the Tokyo session for a few hours. Major European financial centers such as London, Frankfurt, and Zurich are open for business during this time. Major currency pairs related to the Euro, such as EUR/USD and EUR/GBP, are the most active in this session. The economic news releases from the Eurozone and the United Kingdom can cause significant changes in the price of these currency pairs and provide traders with the best possible time to trade these currency pairs.

New York session: The New York session is the last trading session that starts at 12:00 GMT. It overlaps with the London session for a few hours, and the world's major financial institutions do a lot of business activities during this period. Major financial centers in the United States, such as New York and Chicago are active during this time frame, and major currency pairs involving the US dollar, such as USD/JPY and GBP/USD, are the most active. The economic news release from the United States can significantly impact the price of these currency pairs.

Other Influencing Factors

While sessions, in particular, largely impact choosing the best forex market hours for trading various currency pairs, other factors can also be effective in achieving a winning trading strategy , including:

Further, we give a brief description of each of the above cases.

Volatility: Higher volatility can provide more trading opportunities but also brings more risks. If you prefer high volatility, consider trading the EUR during the London session or the EUR/USD currency pair during the overlap between the London and New York sessions.

Liquidity: Higher liquidity guarantees you enter and exit trades at desired prices. The London session offers the highest liquidity in currency pairs where one side is the EUR or the GBP, due to the presence of major European financial centers.

Trading Strategy: Different trading strategies perform better in certain hours and currency pairs. For example, if you are a scalper, you may choose the EUR/USD currency pair due to its high liquidity, at the same time, you may not consider the Sydney session suitable because of its lower volatility. On the other hand, traders using a swing trade strategy may find trading opportunities during quieter hours on other currency pairs.

Economic Calendar: Be attentive to economic news and important events that may affect the forex market. Trading during important reports can lead to increased volatility and potential trading opportunities. For example, the US dollar can fluctuate more when the Fed interest rate is announced.