Forex Trading Hours
One of the biggest advantages of trading on the Foreign Exchange market (Forex or FX market) is that it never sleeps. It is open twenty-four hours a day and seven days a week all year long, because trading is always open at one of the world’s major trading centers. These major trading locations are Sydney, London, Tokyo, and New York, and because each time zone is different there is always activity for traders all over the world. However, there are certain times that are better for certain traders, and a few methods to know what is best for each trader.
The Currency Method
Most traders have one or two currencies that they trade most, or a specific currency pair that they prefer over others. These currencies are most active during specific times, such as trading the U.S. dollar during New York’s trading time or Japanese yen during Tokyo’s, and this will be the trader’s most active window for trading. Sometimes trading times overlap, and for currency pair traders this can be an excellent opportunity to make more money and score more lucrative trades.
Time zone overlaps are probably the most popular method of determining a trader’s work schedule, since these peak periods offer the most trades in terms of quantity and quality. New York and London overlap, London overlaps with Sydney, and Sydney and Tokyo overlap every day. For example, someone who prefers Japanese yen (JPY) and British pounds sterling (GBP) would trade at the peak hours when Tokyo and London overlap for best results.
The Trader Method
Other traders trade according to their own personal scheduling needs, especially those with extensive family responsibilities or other jobs. The trader can use his or her own needs to dictate the hours worked, and then trade in whatever currencies are most active during that period. Use the currency method to determine what currencies are most active during a certain period, usually by overlapping time zones.
Keep in mind that the trader method can take a lot more practice and research than the currency method, since it requires in-depth knowledge of what is trading and when in order to be successful and effective. The trader will need to understand what is going on at the time of day or night he or she is trading at instead of choosing a currency and sticking with it, and this is not always the most profitable approach. Consider using a different method when possible, even if it means choosing a currency pair based on the time zone that is most profitable and convenient and sticking with it by making some sacrifices.
Combining the Methods
Some traders choose to combine the two methods by finding the time that works for them and then working with the currency traded during that period and sticking with it. Traders on the Forex market are not limited to trading the currency from their home countries because Forex trading hours are so diverse. An American trader can specialize in yen or pounds sterling just as easily as he or she can choose the U.S. dollar and the same goes for British, Japanese, or any other trader.
The opposite method also works: choose the currency that is most appealing for whatever reason to the trader and then find the time when it is traded most often. This uses the currency method most, but traders do not have to wait for peak times to trade. There are trades for any currency during off-peak hours, but they may not be as lucrative or as frequent, but it could work well for someone who only dabbles in Forex trading instead of making it a career.