Introduction
We have heard many profound idioms about time, like ‘time waits for no one,’ ‘time is money,’ and ‘time is the most valuable thing a man can spend.’ Indeed, everything in life, including forex, is governed by time.
You can be the most skilled trader in the world. But if you choose the wrong time to trade, it becomes challenging to achieve success and grow your equity curve.
Also, it’s not about the quantity of time spent but the timing. Patience is key. It’s about the skill of knowing the absolute right time to pounce, like how a predator stalks its prey.
This article will cover everything time-related in the currencies market: forex market times, the best time frame to trade forex, and the best times to trade forex.
Best forex trading hours
Of course, in order to know what is the best time to trade in forex, we have to understand market sessions. FX operates 24/5, opening from Sunday at 21h00 or 22h00 GMT (Sydney start) until 21h00 GMT on Friday (New York end).
The market is governed by four forex market sessions (Sydney, Tokyo, London, and New York), as demonstrated in the image below:
These periods denote the business hours of the four prominent forex financial centres or hubs. Knowing the best time to trade forex is to understand activity levels. Traders are looking for the liveliest sessions to maximise profit and find the perfect opportunities.
You should also note that you can only be awake in some sessions due to a clash in time zones. For instance, it is around midnight in London when the Sydney session starts. Hey, we all need our sleep.
Nonetheless, each session’s activity and general mood levels are different. So it’s useful to understand the distinctions between these forex market times.
Sydney session
This is the official start of the trading day. The Sydney session begins at 21h00 or 22h00 GMT and ends at 06h00 GMT. This period is the least active for the majority of traders globally. Yet, you can see some interesting action, like gaps on Sundays.
This is because the market is regrouping from the weekend pause and may factor in economic developments during this time.
The first hour of this session is the ‘rollover’ period (when swaps are applied), where dealers worldwide reset their systems.
This is not the best time to trade forex since the spreads are abnormally high. Fortunately, this period lasts only an hour before things return to normality. The Australian session understandably will see a spike in volatility for AUD-based pairs.
Also, plenty of high-impact Aussie and New Zealand-related economic events affect the entire FX market.
Tokyo session
The Tokyo session starts at 23h00 GMT and ends at 08h00 GMT. This period is unique in that it coincides with the Australian and London sessions, which we call an overlap. This means that one session is open while another is about to close.
Experts regard these phases as the best time for forex trading, and the reason is obvious. Here, you have three financial centers operating at the same stretch, bringing about a surge in the number of participants.
The Tokyo session is also the best time to trade USD JPY and other Yen-based markets like EUR JPY, CAD JPY, NZD JPY, AUD JPY, etc. You should keep an eye out for any Japan-related news events should you be awake during this period, as these can be impactful.
London session
This session (open from 07h00 GMT to 16h00 GMT) is a worthy contender for the best time to trade forex. It’s home to two of the most traded currencies globally: the euro and the British pound sterling. Hence, expect the greatest pip movements in EUR and GBP-denominated pairs within this time.
The London session is part of the third overlapping period (London-New York) because the New York session opens midway while it’s active. It is one of the best times to trade EUR USD, given the respective euro and dollar influence.
Overall, we can observe all currency pairs picking steam and a generally noticeable increase in the depth of trends with the London session.
New York session
This stretch is what we consider the ‘grand daddy’ of all the sessions. In the eyes of most traders, it is the best time to trade forex. The New York session is where many trends begin and conclude. All pairs in second gear before this time will move into fifth or sixth gear here.
Similar to the London session, it is among the best times to trade EUR USD. Yet, all dollar-based pairs, like NZD USD, AUD USD, and USD CAD, are the most active within the New York session.
Understandably, some of the most anticipated news events in forex, like Non-Farm Payrolls and the Fed interest rate decision, are announced here.
Understanding time frames
Time frames are another time-focused element. Although not necessarily related to finding the best time to trade forex, they are beneficial to appreciate. We view the markets through different lenses based on designated time units, which greatly affects your chart-reading skills.
How do they work? For instance, An M15 (15-minute) chart shows all the price formations or candles formed in the last 15 minutes. The D1 (daily) time frame presents all candles that took one day to form, and so on.
Most charting platforms like MT4 will have at least nine time frames:
- M1 (one minute)
- M5 (five minutes)
- M15 (15 minutes)
- M30 (30 minutes)
- H1 (1 hour)
- H4 (4 hour)
- D1 (daily)
- W1 (weekly)
- MN (monthly)
A lower chart understandably offers more price action, given the shortness of time it takes to materialise. Although the information is greater, these time frames come with noise. You’ll notice that the market appears to move faster than it is, which can result in false signals or whipsaws.
Conversely, data on a higher time frame, like the daily chart, takes longer to form. Therefore, the movements are a lot slower, making them more reliable. A higher time frame offers a bird’s eye view and ‘cleaner’ price action compared to a lower one.
Below is an image of the M15 and 4HR charts to juxtapose the two.
Okay, this is all well and good, but you may be wondering what the best timeframe to trade forex is. There is no definitive answer, as it depends on your inherent trader profile or style.
We have four primary kinds of traders in forex: scalpers, day traders, swing traders, and position traders.
The table below is a guide on the preferred time frames for each of these respective styles.
| Trader type | Recommended time-frames |
| Scalpers | M1 to M15- |
| Day traders | M15 to H1 |
| Swing traders | H4 to W1 |
| Position traders | D1 to MN |
The main thing to remember is that the lower in time frame you go, the noisier it gets. The higher in chart reference you go, the less noisier it becomes. Both of these qualities have opposing trade-offs analysts deal with accordingly in their strategies.
Conclusion: so, when is the best time to trade forex?
So, let’s summarise: what is the best time to trade in forex? No one wants a ‘dead’ market. So, as we said previously, high activity is the name of the game. The periods that consistently generate the most ‘buzz’ are:
- Sydney-Tokyo overlap
- Tokyo-Sydney overlap
- London-New York overlap
- London session
- New York session
What’s also worth noting is that short-term traders like scalpers and day traders generally have time-sensitive strategies. This means they need to be livelier and more particular on when they trade.
For long-term chartists like swing traders, it matters far less about knowing the best time to trade forex pairs. So, they can enter a position at any time because they always plan to hold them for long periods anyway.
Lastly, although traders desire highly active sessions, you should be wary of some high-impact news announcements. These can make such periods less favorable because prices can go haywire.
