By Nicholas Jarder
Forex trading is done on a 24 hour basis five days a week through an informal global marketplace where players are electronically linked and transactions are accomplished through servers and computers and virtual networks. Because of the differences in time zones, trading activities in some countries are from Monday to Friday (Asia and Australia) while it is Sunday and to Friday for some (Europe and North America). Because of the differences in time zones it is best to relate everything to GMT (Greenwich Mean Time) and call the forex trading hours as Forex Trading Hours GMT.
A typical forex trading day starts at 8 A.M. Sydney, Australia time (9:00 P.M. GMT). From there, trading activities for the day cycle through all financial centers in the world. Finally, daily transaction books are closed at 5:00 P.M. New York time (10:00 P.M. GMT)
Take note that as businesses are closing in the New York, they are already starting a new day in Sydney. This in effect automatically rolls over forex trading activities from one day to the next. Because of this, once forex brokers open their servers on a Monday 8:00 A.M. Sydney time, they keep them on until 5:00 P.M. Friday New York time.
Take note too of the 8 A.M. Sydney time Monday opening of forex trading activities. This is still 4:00 P.M. Sunday in New York. Which means North American traders can trade from Sunday to Friday.
In practice, forex trading zones are divided into 4 sessions representing the biggest financial centers of the world where a great portion of financial transactions occur and where many of the major banks and financial institutions are located. These include Sydney, Tokyo, London, and New York. Coincidentally, their respective currencies are considered major currencies which are freely traded and accepted anywhere in the world. Each of the forex trading session below is expressed in Forex Trading Hours GMT or simply GMT.
Sydney Session (10:00 P.M. GMT to 18:00 P.M GMT) Trading volume is relatively thin and mostly coming from Australian and New Zealand financial and banking institutions.
Tokyo Session (11:00 P.M. GMT to 8:00 A.M. GMT) the trading volume in this session is substantial coming from all over Asia including Hong Kong, China, Malaysia, Singapore, with overlapping trading activities from Australia and New Zealand. The market participants include commercial and financial institutions including central banks.
London Session (7:00 A.M. GMT to 4:00 P.M.) The London session accounts for approximately 30% of the total daily forex transactions. Volume is normally higher in this session since it overlaps with 2 others. Because of this, prices are rather volatile too. Most trends take shape in this session which is often carried over to the next session.
If we are to compare the volatility of each session in terms of the average daily pips from the day’s low to the day’s high of the major currencies the European session will easily top all others.
New York Session (1:00 P.M. GMT to 10:00 P.M. GMT) Volatility and volume is usually highest in this session since two other sessions overlap with this. It is also during this session when major economic data and other price moving announcements are released.
The most active (and most volatile as well) forex trading hours GMT is during the London session. The Tokyo session is still in its final hours of trading as London gets underway while the New York session starts to run just as London traders are coming back from lunch. While it is true that the more active sessions offer more trade opportunities to forex traders, it does not always mean they are the best times to trade. In forex trading, it is suicidal to enter the market without a carefully studied trading plan. The trading plan is culled from fundamentally sound assumptions made after one has carefully studied the market. It also dictates the entry and exit points based on these assumptions. Based on this, the best time to enter a trade is when the target entry points set by the plan has been reached. This could come anytime in any of the day’s session and not necessarily during the most active.
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Forex Trading Hours GMT