The forex market operates 24 hours a day for five days a week, and is composed of four major trading sessions. The trading sessions of the Forex market are the Sydney session (from 21:00 to 06:00 UTC), the Tokyo session (from 00:00 to 09:00 UTC), the London session (from 07:00 to 16:00 UTC), and the New York session (from 13:00 to 22:00 UTC).
Each forex trading session has different levels of liquidity, volatility and market partecipation from traders. Trading activity and liquidity peak when sessions overlap, particularly during the London-New York overlap from 13:00 to 16:00 UTC, which sees the highest trading volume and is the best time to trade Forex.
On the other hand, the worst time to trade Forex is during low-liquidity periods, such as late December, due to wider spreads, order execution delays, and increased requotes. Trading is unfavorable during periods of excessive volatility, such as during economic news releases, because of market unpredictability and sharp price swings.
When does the forex market open?
The Forex market opens 24 hours a day, five days a week, thanks to the presence of four major trading sessions: Sydney, Tokyo, London, and New York. The Forex market ensures continuous trading from Monday to Friday across different time zones thanks to the four trading sessions operating at different times.
Forex market hours are primarily based on UTC (Universal Coordinated Time), but brokers and traders may also use GMT (Greenwich Mean Time), CET (Central European Time), or EET (Eastern European Time) depending on their location and platform settings.
When the Forex market sessions overlap they create periods of high Forex trading activity, particularly when the the overlapping happens during the London and New York market times.
The table with the Forex market sessions is shown below.
| Time zone | Sydney | Tokyo | London | New York |
|---|---|---|---|---|
| UTC | 21:00 – 06:00 | 00:00 – 09:00 | 07:00 – 16:00 | 13:00 – 22:00 |
| GMT | 21:00 – 06:00 | 00:00 – 09:00 | 07:00 – 16:00 | 13:00 – 22:00 |
| CET | 22:00 – 07:00 | 01:00 – 10:00 | 08:00 – 17:00 | 14:00 – 23:00 |
| EET | 23:00 – 08:00 | 02:00 – 11:00 | 09:00 – 18:00 | 15:00 – 00:00 |
How do Forex market sessions affects the Forex market?
Forex market sessions affect the Forex market by influencing liquidity, volatility, and trading opportunities. Forex market hours affect how traders approach the market, as the trading activity surges and decreases depending on the trading hour. Trading in the Forex market during low liquidity or high volatility may cause traders to lose money.
The Forex market session starts with the Sydney Forex session at 21:00 UTC. The Sydney Forex session is the least active because trading volumes are low and volatility is minimal. Most active traders during this period are from Australia and New Zealand, and they focus their trading on AUD and NZD currency pairs.
The Tokyo Forex session begins at 00:00 UTC while Sydney remains open. The Tokyo Forex session is a good time for Australian traders because it sees slightly higher trading volumes and liquidity. The most traded currency pairs during this session are USD/JPY, AUD/JPY, and USD/AUD.
The Sydney session closes at 06:00 UTC while the Tokyo session remains open. During this Forex trading hour the Liquidity starts to decline because no other major session is open. The most active currency pair during this period is USD/JPY, as Japanese financial institutions and traders dominate the market.
The London Forex session opens at 07:00 UTC while Tokyo remains open until 09:00 UTC. The Forex liquidity starts to increase during this session as the high-liquid London Forex session overlaps with the Tokyo Forex session.
The London Forex session continues from 09:00 to 16:00 UTC, making it one of the most important trading sessions. The London Forex session is the most liquid session because it accounts for almost 50% of global trading volume and the time zone allows participation from traders in both Europe and other regions. Additionally, the London Forex session overlaps with both Tokyo session (from 07:00 UTC to 09:00 UTC) and New York session (from 13:00 UTC to 16:00 UTC).
The London-New York Forex overlap is the most volatile period because many traders execute high-volume orders. The most traded currency pairs during this session are EUR/USD, USD/JPY, and GBP/USD, as interbank activity between the U.S. and Europe reaches its peak.
The New York Forex session continues from 16:00 to 20:00 UTC. During this time volatility gradually declines as the London session closes at 16:00 UTC. The U.S. dollar remains highly active because it is involved in almost 90% of all forex transactions. Forex traders monitor U.S. economic data and Federal Reserve announcements during this time.
Between 20:00 to 22:00 UTC the New York Forex session overlaps with the Sydney session. Trading activity during this overlap declines sharply because U.S. traders end their day while Australia and New Zealand prepare for a new trading day. Despite the 24-hour market structure, this period has low liquidity and minimal volatility.
What is the best time to trade forex?
The best time to trade Forex is between 13:00 and 16:00 UTC when the London Forex market session and New York Forex market session overlap. The London and New York Forex market overlap create many trading opportunities for Forex traders as large amounts of liquidity and volatility are generated.
London is the Forex capital of the world, and the United States plays a major role in global trading volumes. The London-New York overlap is the most active period because both financial centers operate simultaneously. This results in high liquidity, allowing traders to execute orders quickly with tighter spreads.
The increased liquidity and volatility during ththe London and New York overlap provide traders with more trading opportunities. Institutional investors, hedge funds, and central banks actively participate, ensuring continuous market movements. This allows traders to enter and exit positions efficiently without major price fluctuations due to low market depth.
The overlap between the New York and London session increases the trading risk due to price swings that may lead to unexpected losses, especially without proper risk management. Those who trade during this period must use stop-loss orders and position-sizing strategies to mitigate potential downside risks.
What is the worst time to trade forex?
The worst time to trade Forex is right before or after major news events, during holidays, and in low-volatility periods like summer and late December. These times lead to unpredictable price movements, reduced liquidity, and wider spreads, which increase the risk of slippage and difficulty in executing trades efficiently.
Market news events cause extreme volatility because traders react instantly to economic releases, central bank decisions, or geopolitical developments. Forex brokers provide economic calendars that highlight events likely to impact the market. Liquidity often disappears when news is released, which makes it difficult to close positions or execute trades at intended prices.
Holidays slow down Forex markets because trading activity decreases significantly. Weekends have almost no trading because the market is closed, and major holidays also lead to lower liquidity. Volatility drops and price movements become irregular because large institutional traders are absent. Many traders prefer to wait until markets fully resume activity before placing trades.
Seasonality affects Forex volatility because certain months experience lower trading volumes. Summer and the second half of December are less active because traders and institutions reduce their trading activity. In contrast, autumn and the period between January and August typically see higher market participation, which creates more stable and favorable trading conditions.
What happens during less liquid forex trading hours?
During less liquid Forex trading hours such as between 21:00 UTC and 06:00 UTC, spreads widen and traders may face difficulties in opening or closing orders due to lack of liquidity. Traders operating in less liquid Forex trading hours experience execution delays, price slippage, or unfavorable trading conditions.
Liquidity decreases when fewer traders participate in the market because liquidity represents the availability of an asset, in this case, currencies. The more Forex traders actively trading, the more liquid the Forex market becomes. High Forex liquidity results in narrower Forex spreads, while low liquidity leads to wider spreads.
Opening and closing orders become more difficult in low-liquidity conditions because brokers must match each trade with an opposite order. If a trader places a Buy order on USD, the broker searches for a Sell order at the same price. When counterparties are scarce, the broker may struggle to execute the trade at the intended price or delay order fulfillment.
Requotes occur more frequently during low liquidity periods because brokers cannot find a matching order at the trader’s requested price. If a trader places a Buy order on EUR/USD at 1.0000, but no Sell orders exist at that price, the broker will look for the closest available price. As a result, the trader may receive a requote at a higher price, which increases trading costs unexpectedly.
What are the best Forex Trading Hours for Major Currency Pairs?
The best Forex market hours to trade major Forex pairs are listed below.
- GBP/USD: Best to trade during the London market opening and London-New York overlap when British and U.S. traders are active. Worst during Asian sessions due to low liquidity.
- EUR/USD: Best to trade from 07:00 to 22:00 UTC, with peak activity from 13:00 to 16:00 UTC during the London-New York overlap. Worst during Asian sessions when liquidity drops.
- USD/JPY: Best to trade between 12:00 and 15:00 UTC during the European-U.S. session overlap. Worst from 03:00 to 05:00 UTC when the Tokyo market closes and from 09:00 to 12:00 UTC after New York closes.
- USD/CAD: Best to trade during the London-New York overlap when both markets are open. Volatility is highest between 12:30 and 13:30 UTC, when U.S. and Canadian economic reports are released.
- AUD/USD: Best to trade from 19:00 to 04:30 UTC, when the Sydney and early Asian sessions are active. Liquidity also increases during the New York-Sydney overlap.
- NZD/USD: Best to trade during the Asian and Sydney sessions, from 00:00 to 18:00 UTC. Worst outside these hours because of strong market correlation with New Zealand and Australia.
- EUR/GBP: Best to trade from 08:00 to 16:00 UTC, during the London and European sessions. Liquidity remains high, but spreads widen outside these hours, making trading less cost-effective.