Because Forex is a 24 hour, 5 day weekly trading market, it is very convenient to make your trades whenever you have the time. If you have a day job, then you can get started with Forex trading when you get off work. However, just because the Forex market is open 24 hours daily, it doesn’t mean that you should be trading at anytime. The Forex market changes depending on time zones and you will find that some times are much more profitable for trading than others.
A common misconception is that all the Forex markets are open 24 hours a day. In reality, each Forex market is only open for a set period of time, though there is always a market open. For example, the Forex market opens at 5PM in Sydney and closes at 1AM. In Tokyo, the market opens at 7PM and closes at 2AM. In New York, the Forex market opens at 8AM and closes at 5PM. In Europe, the Frankfurt Forex market opens at 2AM and closes at 10AM. In London, the market opens at 3AM and closes at 11AM.
Because of these different times, there are some times in the day when multiple Forex markets are open. In general, these times are usually the best times to trade. With multiple markets operating at once, there is much more fluidity in the market and also a larger range of pips.
If you are using any short-term Forex strategies, then you will need to pay attention to these times for trading – especially if you are planning to scalp or day trade. You should also consider the currency pairs that you are mostly working with. For example, if you are working with USD/CAD, then you would want to trade while the US and Canadian markets are open. If you are trading with USD and European currencies like GBP or EUR, then you would likely want to trade between 8-11 am because that is when the US and European markets are simultaneously open. For the currencies of Australia, New Zealand, Hong Kong, and Japan, the best time to trade is at midnight to 3AM when those markets are simultaneously open.
On the other hand, there are also times when you probably don’t want to trade. One of the worst times to make your trades is between 5-7PM because only the Chicago and west coast Forex markets are operating then. Also, the banks are typically closed by this time so you will not have as much fluidity. You will want to avoid making your major trades on Fridays because the markets are anticipating the weekend and may go against trends. The spreads will likely be much higher during these periods and there will be much more volatility.