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3. When Can You Trade Forex

Best Days of the Week to Trade Forex

So now we know that the London session is the busiest out of all the other sessions, but there are also certain days in the week where all the markets tend to show more movement.

Know the best days of the week to trade forex.Below is a chart of average pip range for the major pairs for each day of the week:

PAIRSUNDAYMONDAYTUESDAYWEDNESDAYTHURSDAYFRIDAY
EUR/USD69109142136145144
GBP/USD73149172152169179
USD/JPY4165829112498
AUD/USD588411499115111
NZD/USD2881988710096
USD/CAD4393112106120125
USD/CHF5584119107104116
EUR/JPY19133178159223192
GBP/JPY100169213179270232
EUR/GBP357481797591
EUR/CHF355555648776

As you can see from the chart above, it’s best to trade during the middle of the week, since this is when the most action happens.Fridays are usually busy until 12:00 pm EST and then the market pretty much drops dead until it closes at 5:00 pm EST. This means we only work half-days on Fridays.

The weekend always starts early! Yippee!

So based on all these, we’ve learned when the busiest and best days of the week to trade forex are.

The busiest times are usually the best times to trade since high volatility tends to present more opportunities.

Managing Yo Time Wisely

Unless you’re Edward Cullen, who does not sleep, there is no way you can trade all sessions. Even if you could, why would you?

While the forex market is open 24 hours daily, it doesn’t mean that action happens all the time!

Besides, sleep is an integral part of a healthy lifestyle!You need sleep to recharge and have energy so that you can do even the most mundane tasks like mowing the lawn, talking to your spouse, taking the dog for a walk, or organizing your stamp collection.

You’ll definitely need your rest if you plan on becoming a hotshot currency trader.

Every trader should learn when to trade.

Actually, scratch that.

Every trader should know when to trade and when NOT to trade.

Knowing the optimal times you should trade and the times when you should sit out and just play some Fortnite instead.

Unless you play Fortnite a little too much already.

Fortnite Addiction

Here’s a quick cheat sheet of the best and worst times to trade:

Best Times to Trade:

  • When two sessions are overlapping of course! These are also the times where major news events come out to potentially spark some volatility and directional movements. Make sure you bookmark the Market Hours cheat sheet to take note of the Opening and Closing times.
  • The European session tends to be the busiest out of the three.
  • The middle of the week typically shows the most movement, as the pip range widens for most of the major currency pairs.

Worst Times to Trade:

  • Sundays – everyone is sleeping or enjoying their weekend!
  • Fridays – liquidity dies down during the latter part of the U.S. session.
  • Holidays – everybody is taking a break.
  • Major news events – you don’t want to get whipsawed!
  • When you just broke up with your significant other because you chose trading forex over him or her. Wait until the next London session instead.

Can’t seem to trade during the optimal sessions? Don’t fret.

You can always be a swing or position trader. We’ll get back to that later.

Meanwhile, let’s move on to how you actually make money trading currencies. Excited? You should be!

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3. When Can You Trade Forex

Best Times of Day to Trade Forex

Quick pop quiz! What time of the day are TV ratings highest? If you said during prime time, then you would be correct!

What does this have to do with trading sessions? Well, just like TV, “ratings” (a.k.a. liquidity) are at their highest when there are more people participating in the markets.

Forex Trading Session Overlaps

Logically, you would think that this happens during the overlap between the two sessions.If you thought that way, you’d only be half-right.

Let’s discuss some of the characteristics of the two overlap sessions to see why.

Tokyo – London Overlap

Tokyo-London Overlap

Liquidity during this session is pretty thin for a few reasons. Typically, there isn’t as much movement during the Asian session so, once the afternoon hits, it’s pretty much a snooze fest. Zzzzzz.With European traders just starting to get into their offices, trading can be boring as liquidity dries up.

This would be an ideal time to take a chill pill, play some putt-putt golf, or look for potential trades to take for the London and New York sessions.

London – New York Overlap

London-New York Overlap

According to the latest data from FXLIQUIDITY, an analytics service for the FX market, liquidity is at an optimum level around 10 am and 3 pm London time (10 am NY time).

This is when the real shebang begins! You can literally hear traders crack their knuckles during this time because they know they have their work cut out for them.This is the busiest time of day, as traders from the two largest financial centers (London and New York) begin duking it out.

It is during this period where we can see some big moves, especially when news reports from the U.S. and Canada are released.

The markets can also be hit by “late” news coming out of Europe.

If any trends were established during the European session, we could see the trend continue, as U.S. traders decide to jump in and establish their positions after reading up what happened earlier in the day.

Lastly, it’s important to know that it is during this period where the WM/Refinitiv Spot Benchmark Rate is determined. The rate is set at 4 pm London time, and also known as the “London fix”.

A currency “fixing” is a set time each day when the prices of currencies for commercial transactions are set, or fixed.

Since currency prices fluctuate from second to second, a daily “reference point” is needed.

Banks and other financial institutions use this daily rate to set their currency exchange rates, which in turn determine the prices used in corporate foreign exchange transactions.

From a trading standpoint, this daily fix may see a flurry of trading in the market prior (generally 15 to 30 minutes) to the fixing time that abruptly disappears exactly at the fixing time.

Lastly, some European traders may be closing their positions as their day ends, which could lead to some choppy moves right before lunchtime in the U.S.

Choppy Price
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3. When Can You Trade Forex

Trade Forex: New York Session

Right as European traders are getting back from their lunch breaks, the U.S. session begins at 8:00 am EST as traders start rolling into the office.

Just like Asia and Europe, the U.S. session has one major financial center that the markets keep their eyes on.We’re talking of course, about the “City That Never Sleeps!

New York City baby! The concrete jungle where dreams are made of!https://www.youtube-nocookie.com/embed/1TC02VaB1Rw

About 17% of all forex transactions happen in New York. 

Some traders also refer to the New York session as the “North American” trading session.

That’s because aside from New York, there are major financial centers open in North America as well, such as Toronto and Chicago.

Below is a table of the New York session pip ranges of the major currency pairs.

PAIRNEW YORK
EUR/USD77
GBP/USD68
USD/JPY34
AUD/USD68
NZD/USD62
USD/CAD67
USD/CHF56
EUR/JPY72
GBP/JPY77
AUD/JPY71
EUR/GBP50
EUR/CHF46

These pip values were calculated using averages of past data. Take note that these are NOT ABSOLUTE VALUES and can vary depending on liquidity and other market conditions.Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some tips you should know about trading during the New York session:

  • There is high liquidity during the morning, as it overlaps with the European session.
  • Most economic reports are released near the start of the New York session. Remember, about 85% of all trades involve the dollar, so whenever big-time U.S. economic data is released, it has the potential to move the markets.
  • Once European markets close shop, liquidity, and volatility tend to die down during the afternoon U.S. session.
  • There is very little movement Friday afternoon, as Asian traders are out singing in karaoke bars while European traders head off to the pub to watch the soccer match.
  • Also on Fridays, there is the chance of reversals in the second half of the session, as U.S. traders close their positions ahead of the weekend, in order to limit exposure to any weekend news.

Which Pairs Should You Trade?

Take note that there will be a TON of liquidity as both the U.S. and European markets will be open at the same time.

You can bet that banks and multinational companies are burning up the telephone wires.This allows you to trade virtually any pair, although it would be best if you stuck to the major and minor pairs and avoid those weird ones.

Also, because the U.S. dollar is on the other side of the majority of transactions, everybody will be paying attention to U.S. data that is released.

Should these reports come in better or worse than expected, it could dramatically shake up the markets, as the dollar will be jumping up and down.

Confused about which sessions start when? We made the next section just for you!

New York Session in Forex Trading
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3. When Can You Trade Forex

Trade Forex: London Session

Just when Asian market participants are starting to close shop, their European counterparts are just beginning their day.

While there are several financial centers all around Europe, it is London that market participants keep their eyes on.

London Session

Historically, London has always been at a center of trade, thanks to its strategic location.

Today, London benefits from its timezone. London’s morning overlaps with late trading in Asia and London’s afternoon overlap with New York City.It’s no wonder that it is considered the forex capital of the world with thousands of folks making transactions every single minute.

About 43% of all forex transactions happen in London.

Some traders also refer to the London session as the “European” trading session.

That’s because aside from London, there are major financial centers open in Europe as well, such as Geneva, Frankfurt, Zurich, Luxembourg, Paris, Hamburg, Edinburgh, and Amsterdam.

Below is a table of the London session pip ranges of the major currency pairs.

PAIRLONDON
EUR/USD83
GBP/USD82
USD/JPY36
AUD/USD60
NZD/USD64
USD/CAD66
USD/CHF58
EUR/JPY80
GBP/JPY102
AUD/JPY86
EUR/GBP40
EUR/CHF

These pip values were calculated using averages of past data. Take note that these are NOT ABSOLUTE VALUES and can vary depending on liquidity and other market conditions.Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here are some neat facts about the European session:

  • Because the London session crosses with the two other major trading sessions–and with London being such a key financial center–a large chunk of forex transactions take place during this time. This leads to high liquidity and potentially lower transaction costs, i.e., lower pip spreads.
  • Due to the large number of transactions that take place, the London trading session is normally the most volatile session.
  • Most trends begin during the London session, and they typically will continue until the beginning of the New York session.
  • Volatility tends to die down in the middle of the session, as traders often go off to eat lunch before waiting for the New York trading period to begin.
  • Trends can sometimes reverse at the end of the London session, as European traders may decide to lock in profits.

Which Pairs Should You Trade?

Because of the volume of transactions that take place, there is so much liquidity during the European session that almost any pair can be traded.

Of course, it may be best to stick with the majors (EUR/USD, GBP/USD, USD/JPY, and USD/CHF), as these normally have the tightest spreads.

Also, it is these pairs that are normally directly influenced by any news reports that come out during the European session.

You can also try the yen crosses (more specifically, EUR/JPY and GBP/JPY), as these tend to be pretty volatile at this time. Because these are cross pairs, the spreads might be a little wider though.

Next up, we have the New York session, a jungle where dreams are made of. Hey, isn’t that an Alicia Keys song?

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3. When Can You Trade Forex

Trade Forex: Tokyo Session

For traders living in Murica (“America”), the trading day actually begins on Sunday night at 5:00 pm EST (10:00 pm GMT).

However, liquidity doesn’t really show up until the Tokyo open a few hours later.

The opening of the Tokyo session at 12:00 am GMT marks the start of currency trading in Asia.

You should take note that the Tokyo session is sometimes referred to as the Asian session. 

One thing worth noting is that Japan is the third-largest forex trading center in the world.

This shouldn’t be too surprising since the yen is the third most traded currency, partaking in 16.8% of all forex transactions.

Tokyo Session

Overall, around 20% of all forex trading volume takes place during the Asian session.

It’s not all coming from just Tokyo though. There are other major financial centers in Asia such as Singapore and Hong Kong.

What’s interesting is that nowadays, more forex trading volume comes out of Singapore and Hong Kong than Tokyo.

Both Singapore and Hong Kong comprised 7.6% of overall volume each, while Japan had 4.5%.

Maybe “Asian session” is more appropriate than the “Tokyo session”? 🤔

Below is a table of the Asian session pip ranges of the major currency pairs.

PAIRTOKYO
EUR/USD56
GBP/USD54
USD/JPY30
AUD/USD65
NZD/USD58
USD/CAD39
USD/CHF40
EUR/JPY57
GBP/JPY72
AUD/JPY65
EUR/GBP23
EUR/CHF

These pip values were calculated using averages of past data. Take note that these are NOT ABSOLUTE VALUES and can vary depending on liquidity and other market conditions.Also, the session range for EUR/CHF has not been included since the Swiss franc has been pegged to the euro at 1.2000 during the period.

Here some key characteristics that you should know about the Tokyo session:

  • Action isn’t only limited to Japanese shores. Tons of forex transactions are made in other financial hot spots like Hong Kong, Singapore, and Sydney.
  • The main market participants during the Tokyo session are commercial companies (exporters) and central banks. Remember, Japan’s economy is heavily export-dependent, and, with China also being a major trade player, there are a lot of transactions taking place on a daily basis.
  • Liquidity can sometimes be very thin. There will be times when trading during this period will be like fishing – you might have to wait a long, long time before getting a nibble.
  • It is more likely that you will see stronger moves in Asia Pacific currency pairs like AUD/USD and NZD/USD as opposed to non-Asia Pacific pairs like GBP/USD.
  • During those times of thin liquidity, most pairs may stick within a range. This provides opportunities for short day trades or potential breakout trades later in the day.
  • Most of the action takes place early in the session when more economic data is released.
  • Moves in the Tokyo session could set the tone for the rest of the day. Traders in latter sessions will look at what happened during the Tokyo session to help organize and evaluate what strategies to take in other sessions.
  • Typically, after big moves in the preceding New York session, you may see consolidation during the Tokyo session.

Which Pairs Should You Trade?

Since the Tokyo session is when news from Australia, New Zealand, and Japan comes out, this presents a good opportunity to trade news events.Also, there could be more movement in yen pairs as a lot of yen is changing hands as Japanese companies are conducting business.

Take note that China is also an economic superpower, so whenever news comes out from China, it tends to create volatile moves.

With Australia and Japan relying heavily on Chinese demand, we could see greater movement in AUD and JPY pairs when Chinese data comes in.

Now let’s check out how you can trade the London session.

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3. When Can You Trade Forex

Forex Trading Sessions

Now that you know what forex is, why you should trade it, and who makes up the forex market, it’s about time you learned when you can trade.

It’s time to learn about the different forex trading sessions.

Forex Trading Sessions

Yes, it is true that the forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day.

You can make money trading when the market moves up, and you can even make money when the market moves down.

BUT you will have a very difficult time trying to make money when the market doesn’t move at all.

And believe us, there will be times when the market is as still as the victims of Medusa.

Quiet Forex Sessions

This lesson will help determine when the best times of the day are to trade.

Forex Market Hours

Forex Market Hours

Before looking at the best times to trade, we must look at what a 24-hour day in the forex world looks like.

The forex market can be broken up into four major trading sessions: the Sydney session, the Tokyo session, the London session, and Trump’s favorite time to tweet (before he was banned), the New York session.

Historically, the forex market has three peak trading sessions.

Traders often focus on one of the three trading periods, rather than attempt to trade the markets 24 hours per day.

This is known as the “forex 3-session system“.

These sessions consist of the AsianEuropean, and North American sessions, which are also called TokyoLondon, and New York sessions.

Some traders prefer to differentiate sessions by names of the continent, other traders prefer to use the names of the cities.

(We prefer using city names but continents are cool also.)

DID YOU KNOW? The combined share of the top four trading centers, which includes London, New York, Singapore, and Hong Kong amounts to 75% of global FX turnover.

The International Dateline is where, by tradition, the new calendar day starts.

International Date Line

Since New Zealand is a major financial center, the forex markets open there on Monday morning, while it is still Sunday in most of the world.

Even though trading starts in New Zealand, it’s still called the Sydney session. Makes no sense but we don’t make the rules.

Until Friday, there is no time during the week when the market formally closes, although there is a brief lull in activity between about 19:00 and 22:00 GMT when most American traders have gone home and most Kiwi and Aussie traders are getting ready for work.

Other than the weekends, there are just two public holidays when the entire forex market is closed, Christmas and New Year’s Day.

Below are tables of the open and close times for each session:

Spring/Summer in the U.S. (March/April – October/November)

LOCAL TIMEEDTBST (GMT+1)
Sydney Open – 7:00 AMSydney Close  – 4:00 PM5:00 PM2:00 AM10:00 PM7:00 AM
Tokyo Open – 9:00  AMTokyo Close – 6:00 PM8:00 PM5:00 AM1:00 AM10:00 AM
London Open – 8:00 AMLondon Close – 4:00 PM3:00 AM11:00 AM8:00 AM4:00 PM
New York Open – 8:00 AMNew York Close – 5:00 PM8:00 AM5:00 PM1:00 PM10:00 PM

Fall/Winter in the U.S. (October/November – March/April)

LOCAL TIMEESTGMT
Sydney Open – 7:00 AMSydney Close  – 4:00 PM3:00 PM12:00 AM8:00 PM5:00 AM
Tokyo Open – 9:00  AMTokyo Close – 6:00 PM7:00 PM4:00 AM12:00 AM9:00 AM
London Open – 8:00 AMLondon Close – 4:00 PM3:00 AM11:00 AM8:00 AM4:00 PM
New York Open – 8:00 AMNew York Close – 5:00 PM8:00 AM5:00 PM1:00 PM10:00 PM

Actual open and close times are based on local business hours, with most business hours starting somewhere between 7-9 AM local time.

Daylight Savings Time

Open and close times will also vary during the months of October/November and March/April as some countries (like the United States, England, and Australia) shift to/from daylight savings time (DST).

The day of the month that a country shifts to/from DST also varies, confusing us even more.  And Japan doesn’t observe daylight savings, so thank you Japan for keeping it simple.

Now, you’re probably looking at the Sydney Open and wondering why it shifts two hours in the Eastern Timezone.

You’d think that Sydney’s Open would only move one hour when the U.S. adjusts for standard time, but remember that when the U.S. shifts one hour back, Sydney actually moves forward by one hour (seasons are opposite in Australia).

Keep this in mind if you ever plan to trade during that time period.

Dealing with DST is a pain but that’s what happens when a market trades around the clock!

It’s important to remember that the forex market’s opening hours will change in March, April, October, and November, as countries move to daylight savings on different days.

Trading Session Overlaps

Also take notice that in between each forex trading session, there is a period of time where two sessions are open at the same time.

For example, during the summer, from 3:00-4:00 AM ET, the Tokyo session and London session overlap

And during both summer and winter from 8:00 AM-12:00 PM ET, the London session and the New York session overlap.

Naturally, these are the busiest times during the trading day because there is more volume when two markets are open at the same time.

This makes sense because, during those times, all the market participants are wheelin’ and dealin’, which means that more money is transferring hands.

Now let’s take a look at the average pip movement of the major currency pairs during each forex trading session.

PAIRTOKYOLONDONNEW YORK
EUR/USD7611492
GBP/USD9212799
USD/JPY516659
AUD/USD778381
NZD/USD627270
USD/CAD579696
USD/CHF6710283
EUR/JPY102129107
GBP/JPY118151132
AUD/JPY98107103
EUR/GBP786147
EUR/CHF7910984

From the table, you will see that the London session normally provides the most movement.

Notice how some currency pairs have much larger pip movements than others.

Daily Pip Range

Let’s take a more in-depth look at each of the sessions, as well as those periods when the sessions overlap.