Forex or foreign exchange market is the largest financial market in the world, with a daily trading volume of over $5 trillion. It is where currencies are traded among various entities such as banks, corporations, governments, and individual traders. The forex market operates 24 hours a day, five days a week, from Sunday evening to Friday afternoon. However, not all trading sessions are created equal. Different time zones and market participants result in varying levels of liquidity and volatility throughout the day. In this article, we will explore in-depth what time does forex market open and close and what factors affect its trading hours.
Forex Market Trading Sessions
The forex market is divided into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Each session has its unique characteristics, with different levels of trading activity, volatility, and liquidity.
1. Sydney session: The Sydney session starts at 10:00 PM GMT and ends at 7:00 AM GMT. It is the first session to open and is considered the least volatile among all sessions. It is also the smallest in terms of trading volume, accounting for only 4% of the total forex market turnover. The main currency pairs traded during this session are AUD/USD, NZD/USD, and USD/JPY.
2. Tokyo session: The Tokyo session starts at 12:00 AM GMT and ends at 9:00 AM GMT. It is the second session to open and is known for its high volatility, especially during the first hour of trading. The Tokyo session accounts for around 21% of the total forex market turnover. The main currency pairs traded during this session are USD/JPY, EUR/JPY, and AUD/JPY.
3. London session: The London session starts at 8:00 AM GMT and ends at 5:00 PM GMT. It is the most active session, with the highest liquidity and the biggest trading volume, accounting for around 35% of the total forex market turnover. The London session overlaps with the Tokyo and New York sessions, resulting in higher trading activity and volatility. The main currency pairs traded during this session are EUR/USD, GBP/USD, and USD/CHF.
4. New York session: The New York session starts at 1:00 PM GMT and ends at 10:00 PM GMT. It is the last session to open and is known for its high volatility, especially during the first hour of trading. The New York session accounts for around 19% of the total forex market turnover. The main currency pairs traded during this session are USD/CAD, USD/JPY, and EUR/USD.
Factors Affecting Forex Market Trading Hours
The forex market operates 24 hours a day, but not all trading hours are equal. The trading volume, volatility, and liquidity vary depending on the time of day and the trading session. Several factors affect the forex market trading hours, such as:
1. Time zones: The forex market operates in different time zones, which means that trading sessions overlap and result in higher trading activity and volatility. For example, the London session overlaps with the Tokyo and New York sessions, resulting in higher trading volume and liquidity.
2. Economic data releases: Economic data releases, such as GDP, inflation, and employment data, can impact the forex market’s volatility and liquidity. Traders often wait for these releases before making any trading decisions, resulting in higher trading activity during these times.
3. News events: News events, such as political announcements, natural disasters, and global events, can cause a sudden shift in the forex market’s sentiment, resulting in higher volatility and liquidity.
4. Seasonal factors: The forex market’s trading hours can also be affected by seasonal factors, such as holidays and vacations. For example, the forex market is less active during Christmas and New Year holidays, resulting in lower trading volume and liquidity.
Conclusion
In conclusion, the forex market operates 24 hours a day, five days a week, from Sunday evening to Friday afternoon. However, not all trading sessions are equal, with different levels of trading activity, volatility, and liquidity. The forex market is divided into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session, each with its unique characteristics.
The trading hours of the forex market are affected by various factors, such as time zones, economic data releases, news events, and seasonal factors. Traders should be aware of these factors and adjust their trading strategies accordingly to take advantage of the forex market’s varying trading hours.
