While the Forex Trading market is open 24 hours a day, there are a couple of hours known to be the good times to trade forex, and fx trader needs to define such times to maximize the potential profit. The forex market is indeed available 24 hours a day, but that doesn’t mean that the market is effective and worth trading all day long. The thought is to trade when the market is most unstable, because liquidity means a market moves, and money is made when the markets move, not when the market is calm and quiet.
Since currency markets follow the sun as markets open and close, market sentiment shifts and if your goal is to be a day-trading forex, these are the most critical times of the day. The globe has several trade centres. Just to name a few of the big ones in Sydney, Tokyo, Frankfurt, Hong Kong, London and New York that we’re starting down. By far the most significant of these with references to trading forex are London, and New York.
Due to the normal rotation of the earth across the sun, Tokyo is the first financial hub to open for the day, then London opens 6-7 hours later and eventually, New York is the last market to open for the day. During these periods the volumes for forex trading are swelling massively. When the forex trading is more active, the market should have more liquidity. Higher liquidity means slippage is less likely, orders are more likely to be filled out, and currency pair spreads are lowered. These tend to be good times for trade.
While most traders favor to work simply during their regular waking hours or business hours, some traders may favor to adjust their operating hours based on the currency pairs they want to trade the most. For example , a person specifically interested in trading in the Japanese Yen might not be able to experience the same level of liquidity and information flow during the trading session in New York as they would see during the Asian trading session when huge Japanese banks compete for forex business, and Japan publishes its main economic data.
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