The forex market operates in a continuous loop, 24-hours a day, five days a week.
However, this doesn’t mean that trading volume is the same at all hours of the day and night.
The key to successful forex trading lies in trading during those periods of market activity where the volume is highest and spreads are small.
Here we explain global forex trading hours, and then take a close look at the London forex trading session and find out the best time to trade.
Global forex trading hours
Forex trading is divided into four major sessions:
- the Sydney session (which also includes New Zeaaland)
- the Tokyo session (also known as the Asian session)
- the London session (also known as the European session)
- the New York session (also known as the US session)
Each of these sessions corresponds to the business hours of major financial centres worldwide.
However, unlike share trading, which is strictly governed by the opening and closing times of major stock markets, forex trading does not have a regulated central market.
Therefore, there’s no ‘opening bell’ that signals the formal start of a trading session.
Forex session hours are more loosely based on when trading volumes start to pick up and increase, caused by professional forex traders coming online and starting their working day.
London session trading hours
Trading hours
The London forex trading hours are 8.00am to 4.30pm GMT, which is the same time as UTC during the summer, but an hour’s difference during daylight saving time.
Due to daylight saving, forex trading hours are frequently quoted in UTC or Coordinated Universal Time.
These are the session opening hours in local time for the four major forex session around the world:
Characteristics of the London forex session
The London (or European) forex market session is one of the most important and influential trading periods in the global forex market.
Known for its high liquidity and significant trading volumes, the European session plays a pivotal role in shaping daily market movements.
This is because it is based in London, one of the largest and most influential financial centres in the world.
London is home to many of the world’s major banks, hedge funds, and financial institutions, driving high trading volume and liquidity in the forex market.
Around 45% of all forex transactions take place during the London session.
High liquidity
The London session is renowned for its high liquidity, meaning there is a large number of buyers and sellers actively participating in the market.
This high liquidity leads to tighter spreads and more efficient pricing, providing traders with better opportunities to execute trades at their desired price.
The opening of the European forex session often involves a lot of volatility in the first hour or so.
The price of currency pairs involving EUR and GBP frequently change direction at the open of the European session, as the example below illustrates:
Major currency pairs
During the London session, major currency pairs such as EUR/USD, GBP/USD, and EUR/GBP see significant trading activity.
The European currencies, including the euro (EUR) and the British pound (GBP), are particularly active, driven by economic data releases and market events from the Eurozone and the UK.
Economic data releases
Economic data releases from the UK and Eurozone heavily influence the London session.
Key economic indicators such as GDP, inflation rates, employment figures, and central bank announcements can cause substantial volatility in the forex market.
Traders need to closely monitor these news releases to make sure they are in a position to make informed trading decisions.
Overlap with other forex trading sessions
One of the unique characteristics of the London session is its overlap with other major trading sessions.
The London session overlaps with the Tokyo session from 8.00am to 9.00am GMT, and with the New York session from 1.00pm to 5.00pm GMT.
These overlaps result in increased trading activity, higher liquidity, and greater volatility, providing traders with lots of interesting trading opportunities.
Market trends and volatility
The London session often sets the tone for the rest of the trading day.
Market trends established during this session can also influence trading sentiment and price movements in subsequent sessions too.
Watch out for sudden changes in price direction as the US forex session opens.
Geopolitical events
Geopolitical events and developments in Europe can significantly impact the London session.
Political decisions, elections, and geopolitical tensions can lead to sudden market movements and increased volatility.
Forex traders should stay informed about such events as they unfold so they can manage their positions effectively and take appropriate action if sudden price spikes do occur.
Trading strategies for the London session
Given the unique characteristics of the London forex session, traders often employ a specific strategy to capitalise on the rapid price movements that are often seen during this session.
Scalping, day trading breakouts, range trading and trading emerging new trends are common trend trading strategies used during this session.
News trading is also a popular strategy during this session (due to its high liquidity and volatility), although I’d suggest this strategy is best left to more experienced traders.
Analysis and signals for the London open are also available.
If you are a novice trader it may be best to stick to a less volatile trading session, such as the Sydney session.
Scalping:
Scalping aims to make small profits from numerous trades throughout the session.
The high volatility and liquidity of the London session provide ample opportunities for scalpers to enter and exit trades quickly.
- Focus on 1-minute or 5-minute charts to identify short-term price movements
- Use support and resistance levels to pinpoint potential entry and exit points
- Ensure strong risk management practices are in place, such maintaining a favourable risk-reward ratio and controlling your position-size carefully
- Place tight stop-loss orders to limit potential losses due to the high frequency of trades
Day trading breakouts:
The London session is very suitable for using a breakout strategy to capitalise on the increased volatility that often occurs at the opening of the session.
This strategy takes advantage of price breakouts from established support and resistance levels which are formed during the preceeding Tokyo (Asian) session.
- Determine the high and low price levels established during the Asian session, and draw the trendline on your trading chart
- Place buy or sell, and stop-loss orders just above the high and below the low of the Asian session range
- Watch for price breakouts beyond these levels as the London session starts
- Confirm the breakout’s strength with technical indicators like moving averages or the Relative Strength (RSI) indicator
- Place your stop-loss order just below/above the breakout level
- Set take-profit targets based on your pre-determined risk-reward ratio as defined in your rules-based trading plan (e.g., 1:3 or 1:5)
Trend following strategy:
This strategy involves identifying and trading in the direction of the prevailing trend.
The London session often sets the tone for the day’s trading, allowing traders to ride the momentum.
- Use trend indicators like the Parabolic SAR indicator or moving averages (e.g. use a 50-day EMA and a 200-day EMA) to determine the trend direction
- Look for price retracements to key support levels (in an uptrend) or resistance levels (in a downtrend)
- Confirm the retracement’s end and the trend continuation with indicators such as the MACD, Bollinger Bands, or look for reversal candlesticks
- Place a buy order for a long trade at the start of an uptrend, or a sell orders for the start of a downtrend once the direction change is confirmed
- Place stop-loss orders below/above the trend change low or high
- Set take-profit targets based on previous swing highs/lows
Reversal strategy:
A reversal strategy focuses on identifying potential price reversals at key support or resistance levels.
The London session’s volatility can lead to over-extended price movements (overbought or oversold conditions), offering opportunities to trade reversals.
- Look for strong support or resistance levels where price reversals are likely to occur
- Use indicators like the RSI indicator, the MACD, or candlestick patterns (e.g., hammer at the end of a trend, or a shooting star) to identify potential reversal signals
- Wait for additional confirmation, such as a trendline break or a break through upper or lower Bollinger Bands
- Place buy orders at support levels or sell orders at resistance levels once the reversal is confirmed
- Place stop-loss orders beyond the key support/resistance levels
- Set take-profit targets based on previous price swings or other exit strategies as defined in your trading plan
Range-trading strategy:
Range trading involves buying at support levels and selling at resistance levels within a defined price range.
This strategy is effective when the market lacks a clear trend direction and moves sideways in a channel pattern.
- Determine the upper resistance and lower support levels where the price has been bouncing
- Place buy orders near the support level, expecting the price to rebound
- Place sell orders near the resistance level, expecting the price to fall back
- Use indicators like the RSI or the Stochastic indicator to confirm overbought or oversold conditions within the range
- Place stop-loss orders below the support level for long trades, and above the resistance level for short trades
- Set take-profit targets near the opposite range boundary
Optimal trading times
While it’s possible to trade forex around the clock during weekdays, not all hours offer equal opportunities.
Trading is most productive during periods when market sessions overlap.
The highest trading volumes and the best trading conditions occur during these overlaps.
For example, the overlap between the London and New York sessions is particularly active, and accounts for a significant portion of daily trading volume.
This period sees the highest liquidity, which results in tighter spreads and reduced slippage, improving trading efficiency.
Trading during session overlaps
The best time to trade forex often depends on the currency pair you are focusing on.
Currency pairs see heightened activity during the overlaps of their respective trading sessions.
For example, the AUD/JPY pair is most active when both the Sydney and Tokyo sessions are open, while the EUR/USD pair is most active during the overlap of the London and New York sessions.
International Market Hours Calculator
If you want to check the exact market opening hours for the region where you live, you can do so using this handy market hours calculator:
Daylight savings time (DST)
The open and close times of the forex sessions changes in some countries twice a year due to daylight savings.
These changes occur during October/November and again during March/April.
Countries that do have daylight savings include the US, the UK, Australia and New Zealand.
It’s important for forex traders to be aware of daylight saving time changes and to adjust their trading hours accordingly.
Frequently asked questions about forex market hours
What are the global forex market hours?
The forex market operates continuously from Sunday at 9.00pm GMT to Friday at 10.00pm GMT for retail traders.
What are the four primary forex market session hours?
The four primary sessions in the forex market are:
- Sydney: 9.00pm to 7.00am GMT
- Tokyo: 11.00am to 9.00am GMT
- London: 8.00am to 4.30.00pm GMT
- New York: 1.00pm to 10.00pm GMT
What are the highest-volume session overlap times?
The highest volume session overlap times in the forex market typically occur during the following times:
- London/New York overlap: 1.00pm to 5.00pm GMT
- Tokyo/London overlap: 8.00am to 9.00am GMT
- Sydney/Tokyo overlap: 11.00pm to 7.00am GMT
These overlaps generally see increased trading activity due to the simultaneous participation of major financial centres.
What are the best pairs to trade for each overlap time?
London/New York overlap:
- EUR/USD
- GBP/USD
- USD/JPY
Tokyo/London overlap:
- EUR/JPY
- GBP/JPY
- AUD/JPY
Sydney/Tokyo overlap:
- AUD/USD
- AUD/NZD
- NZD/JPY
These pairs are popular during the overlap times due to increased liquidity and volatility, offering the best trading opportunities.
Which forex trading times see the highest volume globally?
The London-New York overlap from 1.00pm to 5.00pm GMT typically experiences the highest trading volume in the forex market.
When is the most volatile time in forex trading?
The most volatile times in forex trading often occur during session overlaps, such as the London-New York overlap from 1.00pm to 5.00pm GMT.
Which forex session is best for beginners to trade?
The Sydney session is often recommended for beginners due to its relatively quiet and predictable market movements.
How does daylight saving time affect forex trading hours?
Daylight saving time changes impact forex trading hours by shifting session times relative to UTC.
Traders should adjust their schedules accordingly, and stay informed about seasonal market opening and closing times.
Which countries change their time due to daylight saving time (DST?)
Australia: Observes DST in most states and territories, except Queensland, Western Australia, and the Northern Territory.
United States: Most states observe DST, with exceptions in Arizona (except for the Navajo Nation) and Hawaii.
Canada: Most provinces and territories observe DST, except for a few regions like Saskatchewan and parts of British Columbia.
European Union: Most countries in the EU observe DST, although there have been discussions about potentially ending the practice.
United Kingdom: Observes DST, moving clocks forward one hour in spring and back one hour in autumn.
New Zealand: Observes DST, typically from late September to early April.
Mexico: Most parts of Mexico observe DST, although some bordering regions with the United States may have different practices.
These changes affect local time relative to GMT in March/April and again in September/October.
This impacts forex trading hours and scheduling for traders operating across different time zones.
Final thoughts
Forex trading is available 24 hours a day, 5.5 days a week, somewhere around the world.
Due to the overlap in global time zones, when the US markets are closing, the Australian and Asian markets are opening, followed by the European markets, ensuring continuous trading around the clock.
This flexibility allows forex traders to fit trading around when they have spare time, accommodating other work, family, or study commitments.
For those new to forex trading, it’s advisable to choose a time of day and week that aligns with your lifestyle, and make that time your dedicated trading time.
Select a major forex pair that corresponds with the trading session you’re involved in, and become familiar with the unique characteristics of that session.
If you are new to trading, avoid the temptation to trade multiple pairs across different sessions simultaneously.
Focus on one pair and one session, practicing your trading skills and learning to trade in lots of different market types before expanding into other sessions or pairs.
Whether it’s day or night, forex trading can be done at almost any convenient time, making it accessible for your trading journey.
Till next time, happy trading!
Happy trading!
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Sources
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- Investopedia – The Best Times To Trade Forex. https://www.investopedia.com/articles/forex/08/forex-trading-schedule-trading-times.asp
