The forex market operates 24 hours a day, however different time periods are typically more important to trade than others. The best time to trade is when the markets are most active and most liquid, with the largest number of market participants involved. Spreads tend to be narrower and ranges wider which makes for greater trading opportunities. Different currency pairs show different activity dependant on geographical location and macroeconomic activity.
The Asian Session which runs from 7PM – 4AM EST is largely dominated by trade in Tokyo. Activity during the Asian Session tends to be thin and ranges are typically subdued until the European session gets going.
The European Session runs from 2AM – 12PM EST, with London making up the bulk of trading during this time period. Many of the large dealing desks are located in London and the open tends to show decent volatility due to the large number of market participants and high transaction volume.
The US Session runs from 8AM – 5PM EST. The ‘European/US’ session overlap between 8AM – 12PM EST is the most important trading period for forex trading, marked by the highest levels of trading activity and market volatility.
