Building strategies to take advantage of Forex market hours

The foreign exchange currency market is international in nature, and therefore not subject to more traditional stock market and commodities trading hours. Since each country is located in different areas and time zones, it’s important to understand forex market hours in each country in order to trade effectively.

The best start is to look at how forex markets are currently structured and how understanding forex market hours and their trading sessions can help to develop a comprehensive strategy.

Trading periods regarding forex market hours can be broken down into three main sessions: The Tokyo Session, the London Session, and the U.S. Session. Tokyo trades between 7PM- 4AM EST, London trades between 3AM- 12PM EST, and the U.S. trades between 8AM- 5PM EST. The forex market trades six days per week, and has no holidays since it’s an international market.

The busiest forex market hours are when two separate trading sessions overlap. Between 8AM- 12 PM, both the U.S. and London trading sessions are open, and between 3AM- 4AM, Tokyo and London are both open. However, between 5PM- 7PM, no sessions are active at all, as such the market slows down considerably.

Even though the major forex markets are in the three major cities listed above, the forex market hours go through a cycle that begins in New Zealand, followed by Australia, Asia, the Middle East, Europe and America. The bulk of the trading actually occurs in the United States and the UK, accounting for over half of the market transactions. As such, the bulk of trading activity during forex market hours occurs during the early morning hours when the London session is just beginning.

Understanding when the major activity occurs during forex market hours is a major step in strategy planning. Once you know the trends and are prepared with your strategy, trading can be effective, and profitable.

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