Forex Trading Hours, When Should I Be Ready For Trading?

Anyone who wants to speculate on currency prices in the foreign exchange currency market (FOREX) is well advised to become adequately acquainted with Greenwich Mean Time (GMT).

The reason this is necessary is because Forex markets trade 24 hours a day, five days a week. Market liquidity experiences peak periods of activity. Knowing these and how they relate to your local time is essential to developing a trading schedule.

This information is also helpful when deciding which currency or currencies to trade. In general, price activity and liquidity are optimal during the business hours of the currency being considered. For example, the trading session in the Tokyo zone begins at midnight GMT and goes until 9 AM GMT. For someone living in the Eastern Time Zone of the United States, that corresponds with the hours of 7 PM to 4 AM EST. this could possibly represent good trading hours for someone living in that time zone that has other time commitments during EST business hours.

Since there are many automated trading systems that can open, monitor and close trades without actual human involvement, there is an even more important factor to be considered regarding the best hours for trading activity.

There are four major Forex trading zones: Sydney, Tokyo, London and New York. The hours of these trading zones all experience some degree of overlap with the adjacent zone. Trading activity reaches its peak when traders from two different zones are active simultaneously.

For instance, there are seven hours of overlap involving the Sydney and Tokyo trading zones. These are the best hours for participating in trades involving the yen (JPY) and other Asian currencies, the Australian dollar (AUD) and New Zealand dollar (NZD).

Due to the distance between Tokyo and London, those two trading zones contain only one hour of overlapping trading.

The London and New York sessions, however, have four hours of overlapping trading activity beginning at 8 AM GMT and concluding at 12 PM GMT. It is during this four hour time period that more Forex transactions take place than during any other trading period, meaning that liquidity will be at its peak, and trading orders will be executed almost instantaneously. This is far and away the best time to be ready to trade.

If these hours coincide with your normal sleeping hours and you wish to participate in trading during these hours, you will need to forgo sleep or utilize and automated trading system.

Just remember that there are, in all probability, trading hours to suit your needs and preferences.

Also, keep in mind that peak liquidity does not necessarily mean that currency markets will be trending. If the number of traders and currency units being traded from a long position are roughly equal to the number of traders and currency units taking a short position, prices will trade in a narrow sideways channel, presenting limited opportunities for profitable trades.

One final factor to consider when it comes to awareness of trading hours is that the first hour after a major trading zone opens is considered important and may provide clues as to the direction prices will take during the remainder of that session.

For more information on forex trading hours the foreign exchange market be sure to visit Lucror FX at today.

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