Timing is everything in life, and that applies to financial markets too. Financial markets have always been popular with people because they promise excellent returns, provided you know what you’re doing. Traditionally, stocks were the financial market of choice for most people. Then, the internet came around, changing everything.
Forex trading has occurred for decades. The only difference is that previously it was limited to governments and institutional investors. Trading foreign currencies on the market wasn’t a viable option for most retail investors and traders. However, the internet’s advent proved a game-changer.
As a result, forex trading has become incredibly popular. All you have to do is scroll through your social media, and you’ll be inundated with numerous advertisements for forex trading platforms, courses, etc. It seems like everyone has hopped on the forex trading gravy train.
Today, people gravitate to the forex market for several reasons. Firstly, forex is the world’s most liquid and valuable financial market. In addition, many people get lured into forex trading. They think it’s an easy way to make money quickly. Unfortunately, that’s not true.
Forex trading has also become extremely popular because the market is open round-the-clock. You can log onto a trading platform in the middle of the night and start trading. However, that doesn’t mean you should hop onto a trading platform at odd hours and trade because timing matters.
Understanding the Different Markets Operating Hours
You’ll want to start by learning about the operating hours of the four different markets. They include:
The New York forex trading market operates between 8 AM and 5 PM EST. It’s also the second-largest forex platform globally, attracting numerous foreign investors because the US Dollar is involved in 90 percent of forex trades.
London’s forex market operates between 3 AM and Noon EST. The Pound is also a popular currency, and London is considered by many the trading capital of the world. According to the BIS, London accounts for nearly 43 percent of global forex trades. It’s also worth noting that many forex trends often originate in London – something technical traders should know.
Tokyo’s forex market operates between 7 PM and 4 AM EST. It was the first Asian trading center to open. As a result, it’s more popular than forex markets in Hong Kong and Singapore. The Japanese Yen is also one of the most popular currencies, often featuring in various trading pairs.
Sydney’s forex market is the smallest of the four major forex markets. However, it’s also the first to open, operating between 5 PM and 2 AM EST.
The Best Time for Forex Trading
Naturally, you might be wondering about the best time for forex trading. Ideally, you’ll want to trade when there’s an overlap between open markets. Overlaps result in higher price ranges, creating more opportunities for traders. Let’s assess these overlaps in detail:
New York and London
The heaviest overlap occurs between the New York and London forex markets between 8 AM and Noon EST. Statistics show that approximately 70 percent of trades happen when these markets overlap because the US Dollar and the Euro are the two most popularly traded currencies. Volatility and trading volume are also high when these markets overlap, making it the ideal time to trade.
Sydney and Tokyo
The Sydney and Tokyo markets overlap between 2 AM and 4 AM EST. This overlap isn’t as volatile as the New York and London overlap. However, it still offers higher pip fluctuation. Consider trading the Euro and Yen during these times.
London and Tokyo
The London and Tokyo markets overlap between 3 AM and 4 AM EST. This overlap has the lowest action and trading volume. The small-time overlap also makes it difficult to identify profitable opportunities.
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