What Are the Best Hours To Trade Forex?

by Andrew McGuinness     Jul 16, 2019

When trading in the foreign exchange market, timing is crucial. The factor of time has the potential to make your trade very expensive or relatively cheap, suffer losses or gain plenty of returns. Of course, the time of day that you decide to trade forex is not the most essential piece of information to consider when trading, but it is a factor that is necessary to keep in mind nonetheless. So, what are the best hours to trade in the forex market? What do you stand to gain from trading at these times and what do you stand to lose when you don’t?

The best trading hours are discovered by first figuring out when the market is in its most active state. The most activity correlates with the best time for trade. The forex market consists of four main exchanges in New York, Singapore, London, and Tokyo. With more activity occurring within one market or among multiple markets, comes a greater likelihood that the markets will become unstable and change at a quicker rate. This grants traders with more possibilities to conduct risky, exciting trades and earn higher returns.

1. Trading hours according to location

Although there are 15 forex trading exchanges around the world, four of these are the most powerful hubs for exchange and should especially be kept in mind. The most active times, and consequently the best times to trade within these four markets, are outlined below:

- New York: 8 AM to 5 PM

- London: 3 AM to 12PM

- Tokyo: 7 PM to 4 AM

- Singapore: 3 PM to 12 AM

2. Coinciding trading hours

Coinciding trading hours cause the market to become especially busy and active. This means when two markets are simultaneously active, traders have an even greater opportunity to trade. The coinciding activities between multiple exchanges are outlined below:

- 8 AM to 12 PM, New York and London exchanges are both active

- 3 PM to 5 PM, New York and Singapore exchanges are both active

- 7 PM to 12 AM, Tokyo and Singapore exchanges are both active

- 3 AM to 4 AM, Tokyo and London exchanges are both active

3. Best hours in general

The best times to trade, if we’re to put this very simply, are when the exchanges coincide in the four time frames listed above. If a professional trader were to choose from these overlapping, heavily trafficked hours, they would choose the New York and London overlap mainly because, when combined, they gross 50% of all trades made within the 15 forex exchanges around the world.

The best hours for trade are obviously not always the most active. Political events that occur can also greatly alter the market and cause a sudden considerable influx of traders all wanting to take advantage of the exchange.

4. Do these hours always lead to greater profit?

The ‘best’ trading hours are not meant for everyone. Volatility caused by a massive influx of traders and a high amount of activity is not always what a trader will benefit from. Despite the fact that most experienced, professional traders feel that this is their time to shine, gaining high returns and benefiting greatly from the traffic, other traders might feel otherwise. Novices to the forex market, for example, may become easily overwhelmed and confused by the amount of changes occurring in the market and how quickly they need to take action.

Get unlimited access to our Learning Center,
Broker Insights and Exclusive Promotions for Free!