The one thing that marks a forex market is its dynamic nature. Here fortunes change in seconds and minutes. If taken positively, this feature also allows a trader to enter the market many times in a single day and garner some profit for himself.
Timing is one thing that would actually determine your success in the forex market and that is why it is essential to find the best time to trade the forex market, the best time with regards to activity, volume of trade etc.
There are some salient features of forex market and until and unless these are understood one cannot find out the best time to trade the forex market.
Forex markets work 24 hours. It starts from Sunday 5 pm EST through Friday 4 pm EST and rollovers at 5 pm EST. Forex trading starts from New Zealand and then is followed by Australia, Asia, the Middle East, Europe and America. The most prominent forex market is undoubtedly the US and the UK. They account for more than half of the total market transactions.
If it comes to major forex markets, London, New York and Tokyo would win hands down. Around 75% of market activities in the New York markets are witnessed in the morning hours while the European markets are still open. And if you want to know when the forex trading is the heaviest, well look for the time when the major markets overlap.
One thing must be evident from this discussion. There is never a cease down in the forex market. When its day for you, its night for someone else. Markets close somewhere and simultaneously, markets open somewhere else. That is what offers traders this tremendous opportunity to make some serious money.
Forex market is characterized by high liquidity and high flexibility and as such traders get the freedom to make choices as per their wishes. They are not bound by the whims of the markets.
So, when you try to determine the best time to trade the forex market this information would prove very useful. Trades have almost always the same relative frequency and until the forex market remains open, the probability of finding a trade whenever you look is almost the same. This is all about volume of trade. It is determined by the number of markets that are open and the number of times each of these markets overlap with each other.
Keeping in mind the forex volume is extremely essential. It is generally seen that the volume of transactions remains high all through the day but when does it peak? The answer is when the Asian markets with Australia and New Zealand, the European markets and the US markets open simultaneously. This is the best time to trade the forex market.
Let’s have a look of the timings of some of these markets.
New York Market : 8 am – 4 pm EST
London Market : 2 am – 12 noon EST
Great Britain Market : 3 am – 11 am EST
Tokyo Market : 8 pm – 4 am EST
Australian Market : 7 pm – 3 pm EST
Just have a look at the above schedule carefully. What do you see? Yes, there are two times when two of the major markets overlap during the trading hours-between 2 am and 4 am EST (Asian/Europe) and between 8 am to 12 pm EST (European/N. American). This is the time you have to target to make profits, the best time to trade the forex markets.