The foreign exchange market, also known as the forex market, is a decentralized financial market where currencies are traded 24 hours a day, five days a week. The market is highly volatile, with daily trading volumes surpassing $5 trillion, making it the largest financial market in the world. Knowing when the forex market is most active can be helpful in making informed trading decisions and maximizing profits.
The forex market is open 24 hours a day, five days a week, from Sunday at 5 pm Eastern Time (ET) to Friday at 5 pm ET. However, not all trading sessions are created equal. There are four major forex trading sessions, each with its own unique characteristics, and the most active hours differ depending on the session.
The Asian session starts at 7 pm ET and ends at 4 am ET. This session is the least volatile of the four and is characterized by lower trading volumes. The major currency pairs traded during this session are the USD/JPY, AUD/USD, and NZD/USD. The forex market is most active during the Asian session when the Tokyo and Sydney markets are open. This is because Japan is the world’s third-largest forex trading center, and Australia is a major exporter of commodities, such as gold and iron ore, which can affect the value of its currency.
The European session starts at 3 am ET and ends at 12 pm ET. This session is the most active of the four and is characterized by high volatility and trading volumes. The major currency pairs traded during this session are the EUR/USD, GBP/USD, and USD/CHF. The forex market is most active during the European session when the London and Frankfurt markets are open. This is because London is the world’s largest forex trading center, and Frankfurt is the financial center of the eurozone.
The North American session starts at 8 am ET and ends at 5 pm ET. This session is less volatile than the European session but more volatile than the Asian session. The major currency pairs traded during this session are the USD/CAD, USD/MXN, and USD/JPY. The forex market is most active during the North American session when the New York market is open. This is because New York is the second-largest forex trading center in the world and is responsible for 19% of global forex trading volume.
The Pacific session starts at 5 pm ET and ends at 2 am ET. This session is the second least volatile of the four and is characterized by lower trading volumes. The major currency pairs traded during this session are the AUD/USD, NZD/USD, and USD/JPY. The forex market is most active during the Pacific session when the Sydney market is open. This is because Sydney is the world’s fourth-largest forex trading center and is responsible for 7% of global forex trading volume.
While the forex market is open 24 hours a day, not all hours are created equal. The most active hours are during the European and North American sessions when the London, Frankfurt, and New York markets are open. During these hours, the market is characterized by high volatility and trading volumes. Traders can take advantage of this by monitoring the market closely and making informed trading decisions. It is important to note that the forex market can be unpredictable, and traders should always use proper risk management techniques to minimize potential losses.
