Forex Market Hours: Open and Close Time

December 14, 2020 - Евгения Корнейчук

In case you were involved in stock trading before, you know about such a concept as ‘market hours’. Physical stock exchanges are usually open for about 6-9 hours, and the time between the open time and the close time is called the market hours. Because shares are often only traded in one location, you can’t buy them from different stock exchanges.

That makes some complications, and many online exchanges usually ‘close’ at the same time as the nearest big stock exchange. For instance, the exchanges located on the East Coast always lost activity after 4 pm, the closing time for NYSE.

With Forex, it’s a bit different. Sure, you can trade currencies outside of major Forex exchanges, but it’s counterproductive, really. People convene at such exchanges to trade their currencies in the comfortable environment, and many online exchanges follow the market hours of these exchanges. Therefore, there’s always a lot of activity while big exchanges are at work.

What’s special about market hours on Forex?

Because many banks are present at all the big exchanges on the world, you can manage your positions 24 hours round, 5 days a week (except holidays). So, for the large Forex market, there are no closing or opening hours. Nevertheless, the market is still more active in certain hours of the day, and these spikes have direct correlation with the working hours of big and smaller exchanges.

It’s important to note that Forex works regardless of your location in the world. If you contact some bank in your vicinity to conclude a Forex deal with them, they’ll just redirect you to their branch in the area where some big Forex exchange is active at the moment.

Major Forex trading sessions

There are three major foreign exchanges in the world. Conveniently, when one closes, another opens, though there are overlaps and extended hours thanks to the abundance of lesser exchanges throughout the world. Because of such coverage, you can trade without restriction at any time of the day.

  • Asia

Tokyo is largely considered a centre for the Asian foreign market. Tokyo exchanges are both the largest (combined) and the first to start trading. When the weekend ends, Tokyo ‘currency shops’ are the first to open – most start at 11 Tokyo time (so, 2 GMT). Closing hours are at 7 GMT, therefore.

After that, the market continues to operate thanks to numerous lesser Eastern exchanges (in Sydney, Wellington, China, Singapore, Moscow, and more) until the opening hours of the major European exchanges.

  • Europe

European markets are represented by London and Frankfurt foreign exchanges, as well as dozen others. London, and its City Forex Ltd, is the main currency market on the continent. It opens at 8:30 GMT and closes at 6 GMT, but until then you can conclude your deals with Warsaw, Frankfurt or Paris.

The interesting thing about the London exchange is that its session overlaps with the session of the NY Forex, which means that there’s always a spike of activity in the later hours of London session.

  • Americas

For America, New York Forex has always been the most prominent exchange, at least for the United States. They open at 2 GMT and close at 11 GMT, which means you have 4 hours of London-NY overlap between 2 pm and 6 pm Greenwich MT. If you visit any online exchange at that time, there’s guaranteed to be some activity spike.

It’s better however to choose an exchange located at either of these regions. And besides that, there are lots more tricks to make profit from large liquidity spikes on the market. You’ll see soon.

There are also lesser foreign exchanges for the East Coast – for instance, several in Los Angeles area, which open at 5 GMT and close at 1 GMT – as well as many small exchanges in Latin America.

How to make profit from market hours

When major exchanges open somewhere in the world, the market experience several spikes, for instance:

  1. Liquidity spike– when many people convene at the same time to conclude some deals on Forex market, you have a larger change that someone buys your currency or sells theirs at the short period of time;
  2. Volatility drop – market risks drop to a favorable level;
  3. Spread tightening – spreads become tighter

In short, trading your currencies during the peaks of activity is much more comfortable than doing so when major markets aren’t exactly active.

But even in market hours, you may experience some setbacks with activity drops. It happens, for instance, when you the market loses momentum – often, several hours after an actual opening time.

Worry not, you can improve your performance by taking several simple measures – these won’t only improve your situation in later hours, but also in uptimes, which means you have almost unlimited potential to better the liquidity of your personal currency supply.

Improving your performance during Forex trading hours

The markets are most liquid 2 or 3 hours into the opening. It’s obvious that trading early is very beneficial for you, but not many people understand just how important the opening hours are. After the morning trade is over and the initial investors are gone, the activity diminishes very significantly.

The later hours may experience a small surge if a lesser exchange or exchanges open at that time. Learning when smaller exchanges open is beneficial for two reasons:

  1. These exchanges obey the same rules, that’s why their early hours bring activity, all the while major exchanges still retain some of their own customers
  2. Some small exchanges open just hours before the major players drop in, which may give you an early start

Considering that the overwhelming majority of investors trade either on their local exchange or when some major exchange opens, they neglect the smaller institutions that do the same thing.

Delhi exchange opens after Tokyo’s initial spike, but they experience the same activity spike of their own. If you visit your exchange at that time, you may catch a brief liquidity increase. That happens, however, because Delhi market is relatively big. There are 3 or 4 ‘major’ exchanges, and just a handful can be called ‘small’. The rest are just tiny in comparison.

Overlap trading

The heaviest of such overlaps happen between London and the US, as mentioned before. This overlap benefits both sides, because London session gains a lot of activity mid-day, and the American exchanges get a boost from the remaining European traders.

But these two markets have value different currencies the most. In London, the British pound has the most liquidity, while in America the American dollar obviously rips the most benefits.

It means that if you were to trade a GBP/USD trading pair during an overlap spike, you could gain an enormous liquidity boost and sell/but within moments. This will give you an opportunity to make profits even from the tiniest of price movements. For that, however, you need incredibly fast reflexes or, better yet, an automated trading system.

In conclusion

The abundance of foreign exchanges throughout the world makes it possible to trade 24 hours a day. However, because major exchanges open at certain times, there are specific activity spikes in certain hours throughout the day. You can benefit from knowing about them, and that’s why this subject is so interesting and popular.

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