The foreign exchange market is a 24-hour non-stop market. The most obvious difference from other trading markets is the continuity of time and the non-binding in space!
The 24-hour openness of the foreign exchange market gives traders a number of unique advantages that are not available in other markets. The fact that the foreign exchange market does not close within a week means that traders can adjust their positions at any time based on upcoming risks and opportunities, and trade when they coincide at different trading hours to obtain more profit opportunities.
Forex trading time is generally divided into four phases: Sydney, Tokyo, London/Europe, and New York. Traders can arrange their own trading hours according to their own schedule. Similarly, when there are major events in the global market or there is a significant overnight news, Forex traders can also close out at any time, or buy at any time. This is very different from the traders who trade stocks: when the stock market changes or because of the impact of large events, they can only stand by and the foreign exchange traders can close the position to reduce the risk without waiting for the opening.
Perhaps the word “money never sleeps” was created by the foreign exchange market. The foreign exchange market is made up of a global network of interconnected banks that provides 24-hour trading opportunities. This means that for any trader, trading an interest rate decision at 12 o’clock in Australia is as simple as trading a rate decision at 2 pm New York time. This gives the foreign exchange market a unique advantage over the stock market.
Time overlap in the Forex market
The Forex market is the largest financial market in the world with a daily trading volume of up to $ 2 trillion. To become a successful forex trader, one must carefully study all the important aspects of the foreign exchange market, including the forex trading hours. But what exactly are the trading hours or trading sessions? These are those hours during which market participants have the opportunity to trade the various Forex pairs.
It is no secret that the FX market can be traded 24 hours, 5 days a week. The international currency market is mainly composed of banks, various companies, central banks, hedge funds and investment firms. Furthermore, smaller Forex brokers and private investors also participate. Since the FX market operates in various time zones, it is possible to trade it almost always. Moreover, the market is not dependent on a single stock market, but consists of a global network of exchanges and brokers.
The aforementioned trading hours refer to the times when the market is open in most of the participating countries. It is believed that when one big FX market closes, another one just opens. It is important to know the times when the market is most active. For example, the New York Session takes place from 08:00 to 17:00 EST, Tokyo 19:00 to 04:00 EST, Sydney from 17:00 to 02:00 EST and London from 3:00 to 12:00 EST.
The largest volume of trades takes place at times when the international sessions overlap.
The Forex trading hours
As mentioned earlier, one of the most attractive features of the Forex market is that it is open 24 hours. This allows investors around the globe to trade during normal business hours, i.e. after work or at night. Nevertheless – not all times open up the same opportunities for the traders. There are trading periods when prices are constantly volatile but also periods when they are almost at a standstill. Many currency pairs have varying activity during a trading day. This circumstance can be attributed to the demographics of the respective market participants.
Even if a 24-hour market offers a significant advantage to many individual and institutional traders, it still carries some risks that should not be underestimated. Although different currencies can be traded at any time, a trader cannot continuously monitor a position. As a result, there are times when opportunities cannot be exploited, or worse, when the market moves against a set order. To minimize such risks, the trader must be aware of when the market has the highest volatility and infer which trading hours best fit his trading plan.
Typically, the market is divided into three primary trading sessions with the highest levels of activity: the Asian, European and North American trading sessions. More commonly known as Tokyo, London and the New York Session, these are the centers of the financial industry on each continent.
Markets are the most active during these three windows, with the majority of banks and companies doing their daily transactions during these trading hours. In addition, a larger number of speculators are online during peak times.