There is nothing new about the fact that the Forex market is by far the biggest and most active exchange markets in the entire financial industry. Different statistics show different results but one thing is beyond doubt: Forex traders are dealing with multiple trillion US dollars every single day.
With such a scale and density (tens of millions of traders worldwide) comes great flexibility. One of the biggest advantages of Forex is not only its scale but also the total time in which the market is open for traders:
As of today, Foreign exchange participants can buy and sell their preferred currencies 24 hours a day, five days a week. An uninterrupted trading day is due to a complex set of trading sessions delegated to three major financial areas: Asian, European, and North American sessions. We’ll explain these sessions more thoroughly in this guide and find out why Forex market trading hours work this way.
A market that is open all-day-long
It doesn’t matter which country or economy you look at, there’s always going to be one similarity in their working culture that is paramount for everyone: there are specifically separated working and leisure hours for every business day. For 8/9/10 hours a day, people go to work and do their jobs, while the rest is designated to take some steam off and concentrate on other important things in life, be it family, hobby, or anything else.
With that said, one would assume that trading on the Forex market would have exactly the same limitations: that there would be specific times of the day when the foreign exchange market would be open for activity. However, if you’re familiar with how the currency exchange market works, you’ll know that this is not the case.
Regardless of whether you’re looking for the Forex market hours EST or GMT, the outcome will always be the same: you can enter the currency market at any given time of the business day, from 5 p.m. EST (9 p.m. GMT) on Sunday all the way to 4 p.m. EST (8 p.m. GMT) on Friday.
This means that at any given time of the day, there is an active foreign exchange market that can easily receive your orders and let you trade currencies for a profit. But how is it possible? Are the market participants and liquidity providers working all-day-long without any rest before the weekends?
No, that would be a very unrealistic assumption; no one works or is required to work all-day-long. There is something else that makes an uninterrupted activity period possible.
Explaining the mechanics behind the Forex market hours chart
So, here’s the thing: the international currency exchange market is this multifaceted financial environment that is comprised of tons of different actors. This list includes commercial and central banks, commercial companies, hedge and investment management funds, and even individual investors and Forex brokers.
One of the key contributors to the these best Forex trading hours is the fact that the Interbank currency exchange – the market where banks exchange currencies – consists of large-scale commercial banks that have many branches across the globe.
What this means is that the individual branches can work during the regular working hours and when they receive new orders from traders, they can either execute those orders themselves – if they’re operational during that time, or delegate the open trading book to another global branch that is open at that time due to the shift in a time zone.
This is actually the main underlying reason why the currency exchange markets are open 24/5: the difference in time zones. Since the market participants and liquidity providers operate in all major areas that make up the trading sessions, there is no actual interruption in the activity of the market, unless there’s an official bank holiday and the market isn’t operational.
Different Forex trading sessions explained
The foreign exchange market isn’t actually one unified exchange or dominated by any particular marketplace. Instead, there are multiple financial centers that are responsible for facilitating trades, as well as acting out the role of the Forex market hours monitor.
There are three sessions across the globe that are responsible for all currency market activities:
- Asian session
- Europen session
- North American session
These sessions make up the entire Forex trading industry and facilitate all of the trades at any given time of the day. But these also include their own sub-sessions. More specifically, there are two session categories in these areas: Major sessions and Minor sessions.
In Major sessions, one can find the most active and crowded financial cities of the world:
- London Session
- New York session
- Tokyo session
- London/US overlap session
As for the Minor sessions, there are:
- Wellington/Auckland session
- Sydney session
- Singapore session
- Hong Kong session
- Frankfurt session
The sessions that take place in the Major cities are actually called their names: London session, Tokyo session, etc. That’s because the financial activity in these urban areas is incredibly high and these sessions generate the largest traffic during the day. But this doesn’t mean that the Minor city sessions are insignificant; in fact, if there weren’t these sessions, Forex trading would still have some lapses in operation times, which we’ll discover in the next chapter.
Forex market opening hours
Now, one other thing to think about here is when is the best Forex trading time frame, because even though there is a possibility to make new orders at any time of the day, it’s not always the best idea to actually exploit this opportunity.
On Forex, there are times when various currency pairs act differently and present different characteristics, be it different levels of volatility, liquidity, or spread quotes. Based on these characteristics, there will be times when your trading effectiveness is incredibly high, whereas at other times you’re more exposed to higher loss risks.
The way you can find out exactly which time periods are more beneficial to your needs is by looking at various trading sessions and find out when they are most active during the day. Depending on which currency pair you choose, the Forex opening times for different sessions will affect them differently.
As we have noted earlier, there are three financial sessions during the day: Asian, European, and North American sessions, which are also known by the names of their cities – Tokyo, London, and New York sessions. These cities are dubbed Majors simply because their operational hours increase the trading activity pretty substantially, the reason being all major market makers and liquidity providers are concentrated in those areas.
So, if you’re trading a EUR/USD pair, it might be the best decision to trade during the overlap between European and North American sessions, as liquidity and volatility of this instrument increase significantly.
Okay, let’s dive a little bit deeper into the different Forex market hours GMT/EST for the above-mentioned sessions and find out how they operate to ensure uninterrupted trading days.
The Asian/Tokyo trading session
Japan isn’t called the Land of the Rising Sun for no reason; it’s the first country that sees the birth of a new day, which is why the financial activity on the international Forex market begins from here. So, after two days of an inactive market, trading hours of the Forex market start from the Asian/Tokyo session.
Now, officially speaking, this session consists of a lot of different areas, including Russia, China, Australia, and New Zealand, and they contribute quite a lot to the seamless operation of the market. However, the pulling force of the Asian session is still Tokyo, which opens at 00:00 GMT (20:00 EST) on Sunday and closes at 06:00 GMT (02:00 EST).
Yet it’s still not the entire picture with the Asian session. You see, the Forex trading times in Tokyo last for a very short time – 6 hours, to be more specific. If there was only one financial area driving the entire session, there would be a 1-hour gap between the closing of the Asian session and the opening of the European session. To offset this inefficiency, there come the other areas we mentioned earlier (Australia, Russia, etc.); they make it so that the actual running time of the Asian session is 23:00 – 08:00 GMT (19:00 – 04:00 EST).
The European/London trading session
The second Forex trading session chronologically is the European session. It starts operating just before the Asian session closes, which provides an overlap in two sessions that is characterized by higher volatility and liquidity.
As noted earlier, the main financial area that drives the European session is London. It opens at 07:30 GMT (03:30 EST) and closes at 15:30 GMT (11:30 EST). As you can see, the London session has a longer operation time (8 hours) than the one of Tokyo, however, just like the Asian session, the European session isn’t inhibited by the Forex trading times EST/GMT of London. Thanks to the operations of Germany, France, etc. the European session actually runs between 07:00 – 16:00 GMT (03:00 – 12:00 EST).
The North American/New York trading session
The last trading session on the international Forex market is the North American session. It kicks off when the Asian session is already finished for several hours, while the European session is halfway through its working day.
In this session, the New York exchange is the biggest load-bearer among other participants like Mexico, Canada, and other Latin American countries. During the active hours of this specific marketplace, the volatility and liquidity are significantly high on currency pairs.
The noon/12:00 GMT (08:00 EST) is the time when the North American session kicks off. This is mainly because this time of the day marks the beginning of trading commodities and futures, as well as the accumulation of economic releases. As for the closing Forex trading times GMT, the North American session officially stops at 20:00 GMT (16:00 EST).
As you can see, there is quite a significant gap between the closing of the North American session and the opening of the Asian session – 3 hours, to be more specific. This is the only time of the day when there are no major sessions powering the currency exchange internationally. You also saw that there are some contrary cases when the two sessions overlap with each other. The effects of these occurrences will be covered in the next chapter.
Overlaps and lapses in Forex time frames and how to use them effectively
First, let’s talk about what happens when the two market sessions overlap with each other. As we saw previously, there are two major overlaps during the day:
- Between Asia and Europe
- Between Europe and North America
The first overlap, Asia/Europe, occurs when the Forex opening time of the European session occurs at 07:00 GMT. During that time, the Asian session still has one hour to go as it closes at 08:00 GMT.
The second overlap, Europe/North America, occurs when the North American session kicks in at 12:00 GMT while the European session still has some 4 hours to finish at 16:00 GMT.
Now, the reason why it is important to discuss these overlaps is that traders can maximize the potential posed by them during the day. During an overlap, the market volatility and liquidity increase quite a bit, which is mainly caused by the spike in exchange activities.
So, whenever such an overlap occurs, short-term traders can hop on that train by trading currencies that are vigorously exchanged on these specific markets. For instance, the Asia/Europe overlap will prove advantageous for the EUR/JPY or GBP/JPY traders, whereas the Europe/North America overlaps can be beneficial for the short-time EUR/USD trades.
Now, while these overlaps and increased volatility/liquidity are the best time to trade Forex for short-time traders, it’s actually advisable to hold off if you’re pursuing long-term trading strategies. An entrance during this time of enhanced volatility can easily lead them to a disadvantageous entry price or another inefficiency of the market.
Contrary to the above-mentioned overlaps, there is one significant lapse in the operations of the three sessions. When the North American session ends at 20:00 GMT, there is an entire 3-hour gap before the Asian session opens at 23:00 GMT. This time period is characterized by low liquidity when there are no major sessions that can purchase your assets.
Granted, you can still open the trades during this time, the volatility spike is so huge that it can easily destroy any trader’s account balance. Besides, at around 00:00 GMT, the bid/ask spreads tend to get wider, costing larger commissions for Forex traders.
So, what is the best Forex trading time then? Well, as the experience shows, the initial three hours of any major session, be it Asian, European, or North American, tends to be the most effective due to increased market activities but not financial frenzy.
On top of that, the first and the last five minutes of every trading hour is characterized by increased volatility and market activity, which can also prove advantageous to short-term Forex traders.
Forex opening and closing time explained
One of the key features of a global foreign exchange market is that people from all around the globe can trade their preferred currencies non-stop during the business week; it’s a 24/5 operation that puts up a serious competition against other financial markets and comes out of it gloriously.
As we have discovered during this guide for the Forex opening market time, there are three individual market sessions around the globe: Asian, European, and North American. These sessions are what make it possible to actually trade currencies 24/5.
The Asian session is dominated by the exchanges of Tokyo, European session – by the exchanges of London, and the North American session – by the exchanges of New York. The three sessions start functioning at different times of the day for 8-9 hours, which ensures that at any given time, a person can place a new trading order without a problem.
Besides the individual sessions and their implications, we’ve also talked about what happens when they overlap with or have a gap between one another. Ultimately, we have seen that whenever the market has moderate levels of volatility and high levels of liquidity, these are the best Forex trading times EST to trade (for short-term traders), whereas the time when the liquidity is low, volatility spikes tremendously and it actually becomes damaging to the people’s accounts.
Having an effective Forex trading strategy depends on a lot of things. One of those things is choosing the best time to enter the market. As it turns out, there are some specific times of the day when different sessions are either overlapping or having the climax of their individual operations. After finding that out, it’s only up to you to make the most of those time periods.