For those new to the world of forex trading, an assemblage of strategies, hacks, tools, and knowledge base probably are at their disposal. In theory at least, that’s the type of preparation expected of a new trader ready to dive into the waiting game that is forex trading. Except, it is fair to ask whether determining the best forex trading hours are part of said new trader’s collection of trading tactics. Many new traders prefer instead to learn other trading tools like Candlesticks, Price Action, Bears and Bulls and others.   

Among all the financial markets, the forex market is the longest running. Open 24 hours from Monday to Friday, it is easy to make the mistake of wanting to trade for as long as the forex market hours allow. However, when it comes to trading in forex, it is best to know the best forex hours and pick at least the best times to trade that suit a trader’s personal schedule.

With four regions of forex market hours in operation, trading during their overlaps is best because those are when trading activity is at its peak. Owing to the global decentralised nature of the forex market, it is fully electronic, and traders should take advantage of the visibility and accessibility that this offers.

What Are the Best Forex Trading Hours?

Before going into the time overlaps, know that the four forex market hours (by time zones) to note (in Eastern Standard Time, EST) are:

1. New York (8 a.m. to 5 p.m.)
   Home to the “Bens”, “Benjamins” or dollar, the New York market is second only to the London forex market. It is the second most participated in market due to the U.S. dollar being the most traded currency in forex with EUR/USD being the top traded currency pair.
   
2. London (3 a.m. to 12 p.m.)
   The London market has a great impact on forex trends worldwide as it is the largest forex platform. The Bank of England’s — headquartered in London — monetary policy and interest rates play a major role in currency fluctuations, and so attracts the participation of many traders.
   
3. Tokyo (7 p.m. to 4 a.m.)
   The first Asian trading centre to begin operations, it comprises most of Asian trading. As the Bank of Japan wields the most influence over the Tokyo market, currency pairs to look out for are USD/JPY and GBP/JPY. The other pair worth considering are GBP/USD since both currencies are major players in the Tokyo market as well.
   
4. Sydney (5 p.m. to 2 a.m.)
   Not the largest of the mega-markets, it is where trading hours officially begin. As it is where official trading business starts, its importance lies in the resumption of market activities after the weekend break. This sees some activity from financial institutions and individual investors preparing for the forex week ahead.  
   
   During time overlaps are when forex pairs see the most price action due to the higher price ranges. If you have come this far and find the time differences between the forex market time zones confusing, it’s understandable. A good time zone converter tool by baby pips on their website can be accessed here.
   
   Meanwhile, below are the three overlaps:
   
   • From 3 am to 4 am – London/Tokyo Overlap
     This is when market trading starts becoming active. Trends, signs of change, or even breakthroughs will emerge, thus offering early opportunities.
     
   • From 8 am to 12 pm – London/New York Overlap
     Considering it is the longest overlap, the bulk of forex activity takes place in this trading window. The U.S. dollar and euro are the two most in demand currencies and this coupled with the longer overlap provide for the ideal volatility for price action.  
     
     When deciding which overlap to trade with, according to region, one such example is for Malaysian forex traders. The best time for a forex trader here to trade is during the London/New York overlap, from 8 a.m. to noon (EST), or also known as the 8:00 AM to 11:00 AM overlap. With Malaysia being in the GMT+8 time zone and 12 hours ahead of EST, the 8 a.m. to noon (EST) is ideal. The currency pairs with high volatility and by extension good tradeability are USD/JPY and EUR/USD because of the economic data made available by the US, UK, Eurozone, and Canada during these hours.
     
   • From 2 am to 4 am – Sydney/Tokyo Overlap
     It’s a market worth considering for the relatively higher pip fluctuation which translates to good liquidity. The focal currency pair here is the EUR/JPY.

Choosing the Ideal Time to Trade Forex

It is easy to simplify the best or ideal time to trade forex in overlaps, but applying these overlaps to an individual trader’s strategy goes beyond perfect timing. Instead of delving deeper into utilising forex time zone overlaps, a trader should get the basics of how time of day also makes a difference in the value of currency pairs and consequently trading style.

Choosing the best currency pairs for trading during certain trading times is also vital. Generally, the forex market’s appeal compared to other financial instruments’ is its relatively easier liquidity and volatility. Even though low liquidity forex pairs do exist, a forex trader would hardly be hard pressed to find alternative high liquidity pairs. For instance, major currencies will always be available as alternatives to a comparatively low liquidity exotic pair.

In terms of volatility, the sheer volume of supply and demand for forex currencies generate a good level of it. This ample price action means great profit potential and trading a forex pair that is of high liquidity at the right time of day could mean turning a profit quickly. For day traders and especially scalpers alike, this is the kind of scenario they would turn to. Of course, finding your pace requires quite a great deal of trial and error. So, opening a MetaTrader 4 demo account would help for a beginner trader to test the waters or experiment with trading strategies. A demo account simulates real-life data and the trading universe without using real money.  

Other Criteria for Best Time to Trade Forex

• Monday Afternoon – when market action picks up following the Monday morning session. Trade volume should have gradually increased and the scenario for trading rosy compared to when the market just opened.
  
• High Liquidity Market Conditions – Typically, trading volume hits its peak in the middle of the week: Tuesday to Thursday.
  
• European Sessions – Also known as London sessions, are well-known among forex traders because they’re when trading activities are at their highest with 30% of trades taking place.  

What Are the Worst Times for Forex Trading?

Knowing the periods to avoid is just as important as knowing the best forex trading hours. Here are the major ones to avoid.

1. Early Monday/Late Sunday
   With the slower trading activity on late Sunday and early Monday, it is no surprise that the most seasoned of traders keep their trading at a minimum during these times. It is after all when the forex week comes to a close and is just starting.
   
2. Holiday Periods
   On holidays or bank holidays in the UK, when banks close, trading volume is lower as banks are the big players of the forex market. The unpredictability of exchange rates also tends to increase during this time, so trading isn’t advised. As most traders pay heed to avoid trading on such days entirely, when in doubt, beginner traders would do well to practise the same.
   
3. Major Breaking News
   Major events tend to temporarily throw markets out of order and take time to digest, with volatility increasing the risk of market entry. Trading the news is a skill every trader would want to master. The steep learning curve, however, means a new trader would probably require more than a mere few weeks to get the hang of how to leverage on breaking news and unpredictability for trading.
   
   A forex economic calendar can help a trader in making informed decisions in times of uncertainty. This calendar allows traders to keep abreast of the latest goings-on not only in news but bank holidays and significant events as well. Additionally, unlike the news, which is more of a broad reference point, a forex economic calendar is specific to trading which shows information relevant to forex trading.
   

Forex Trading Hours are Not the Only Trade Signals

As a rule of thumb, the London/New York (8 a.m. to 12 noon) overlap is preferred by many. On the other hand, during the Sydney and Singapore exchanges from 5 p.m. to 6 p.m. where most trading activity can be seen in this trading window, there’s less trading compared to during the aforementioned overlap. With the numerous components that go into deciding when to trade, it makes perfect sense why no trader has got timing the forex market down to a science.

Tying together timing and unpredictability in the trading of forex could be limiting. Timing the forex market precisely is more an option than a must and best disregarded for now. Secondly, unpredictability such as price fluctuations are inevitable in trading. The best a trader can do when unsure or new to the field is to trade conservatively. By investing initially with a low capital and utilising low leverage, a trader’s loss potential is kept at a minimum or manageable level. For those interested in the advantages of trading with low leverage, there’s a simple guide for beginners on the Babypips website here.

Technical tools also bolster trading strategy. A Relative Strength Index (RSI) which shows currency pairs’ historical demand and supply data helps give a clearer picture on future performance. With RSI, a trader would be able to speculate on a forex pair better for deciding whether to go long or short on it.

Forex Trading Hours and Price Fluctuations

Those who prefer trading according to the different forex market timings, would do well to remember that currency pairs can vary at different rates throughout the week. Indeed, local currencies tend to be more active during their local forex sessions. 

For example, AUD and NZD will likely be the most volatile in the early trading hours of Asia, whereas EUR and USD will usually be clustered at that time. This is also due to the timing at which regional economic data are released.

During the peak forex trading hours, from 8 pm to 1 am Beijing time (GMT+8), exchange rates often experience high fluctuations. Traders in Asia can start trading as early as 3 pm Beijing time and thus take advantage of this ideal time frame, analyse the market condition, and make their best move.

Forex Night Hours: What do They Really Mean?

These night hours usually refer to the Asian currency markets. Since the forex market allows 24 hours of trading time during the week, and spans three major forex market time zones, technically night and day don’t really matter. For instance, in the UK, forex markets open from Sunday 22:00 to Friday 22:00 local time. Elsewhere in Asia, this is anywhere from when US markets close at 17:00 EST to the next day in European markets at 08:00 CET. Hence, overnight trading in the UK would mean day trading for those trading in Asian markets and vice versa.

Here the argument that trading at a trader’s preferred time overlap of choice stands to reason. Therefore, the best conditions in which to trade still boils down to relatively high liquidity and volatility, as well as when markets are most active.

Afterthought

Knowing when to trade forex is a definite boon to any trader. However, it is not the only be all and end all to trading. There have been instances where traders with bad timing have succeeded on other strategies. World renowned traders like Jim Rogers and Gary Bielfeldt have enjoyed significant success despite being bad timers as traders.

Whether it be Roger’s slow and low approach or Bielfeldt’s use of stops to recuperate from minor instead of unmanageable losses, every trader should know to use a combination of trading tools made available to them. Where one lacks in a single area, one makes up for in another.

FAQs

1. What is the best time to trade forex in Malaysia?
   The best time for a forex trader here to trade is during the London/New York overlap, from 8 a.m. to noon (EST), or also known as the 8:00 AM to 11:00 AM overlap. With Malaysia being in the GMT+8 time zone and 12 hours ahead of EST, the 8 a.m. to noon (EST) is ideal. The currency pairs with high volatility and by extension good tradeability are USD/JPY and EUR/USD because of the economic data made available by US, UK, the Eurozone, and Canada during these hours.
   
2. What is the best time to trade?
   • Monday Afternoon – when market action picks up following the Monday morning session. Trade volume should have gradually increased and the scenario for trading rosy compared to when the market just opened.
     
   • High Liquidity Market Conditions – Typically, trading volume hits its peak in the middle of the week: Tuesday to Thursday.
     
   • European Sessions – Also known as London sessions, are well-known among forex traders as when trading activities are at their highest with 30% of trades taking place. 
     
3. What time does forex close in Malaysia?
   Open 24 hours from Monday to Friday, it is easy to make the mistake of wanting to trade for as long as the forex market hours allow. However, when it comes to trading in forex, it is best to know the best forex hours and pick at least the best times to trade that suit a trader’s personal schedule.
   
   With four regions of forex market hours in operation, trading during their overlaps is best because those are when trading activity is at its peak. Owing to the global decentralised nature of the forex market, it is fully electronic, and traders should take advantage of the visibility and accessibility that this offers.
   
4. Is it good to trade forex at night?
   In the UK, forex markets open from Sunday 22:00 to Friday 22:00 local time. Elsewhere in Asia, it is anywhere from when US markets close at 17:00 EST to the next day in European markets at 08:00 CET. Hence, overnight trading in the UK would mean day trading for those trading in Asian markets and vice versa.
   
   Here the argument that trading at a trader’s preferred time overlap of choice stands to reason. Therefore, the best conditions in which to trade still boils down to relatively high liquidity and volatility, as well as when markets are most active.