The Most Important Market Hours for Forex Traders

11/04/2010 12:01 am EST

Focus: FOREX

The forex market is a 24-hour market. So, even though certain markets are closed, their currencies are still traded by the markets that are open. Traders in Tokyo, for example, can be buying and selling GBP and USD. Below is a breakdown of the hours of the major world markets.

The trading day commences in Sydney, Australia at 5:00 pm EDT. Two hours later, at 7:00 pm EST, Tokyo then opens. Next, Singapore and Hong Kong open at 9:00 pm EST, followed by the European markets in Frankfurt (2:00 am EST) and London (3:00 am EST). By 4:00 am EST, the European markets are in full swing, and Asia has concluded its trading day. The US markets open first in New York around 8:00 am EST Mondays as Europe winds down. By 5:00 pm EST, Sydney is ready to re-open.

While spot FX trades just about everywhere, the three main markets of Tokyo, London, and New York are the most influential since they represent almost 70% of the world’s FX volume. Foreign exchange activity does not flow evenly, and throughout the course of the international trading day, certain markets are characterized by very heavy trading activity in some (or all) currency pairs, and other periods are characterized by light activity in some (or all) currency pairs.

Foreign exchange activity tends to be the most active when markets overlap, particularly the US markets and the major European markets, i.e. when it is morning in New York and afternoon in London. Below, the major characteristics of the three main markets are outlined:

Tokyo: 7:00 pm EST - 3:00 am EST

Approximately 10% of all FX trading volume takes place during the Tokyo session. Trading can be relatively thin, and hedge funds and banks have been known to use the Tokyo lunch hour to run important stop and option barrier levels. Yen, kiwi, and aussie pairs tend to be the biggest movers
during Tokyo hours as other currencies are quite thin and usually do not move.

London: 3:00 am EST - 11:00 am EST

London is by far the most important and influential FX market on the planet, with approximately 30% of all transactions. Most big banks’ dealing desks are run out of London and the market is responsible for roughly 28% of total spot volume. London tends to be the most orderly market due to the large liquidity and ease of completing transactions. Most large market participants use London hours to complete serious FX deals.

New York: 8:00 am EST - 4:00 pm EST

New York is the second most important market in FX, with approximately 16% of market volume. New York trading is very liquid and is responsible for over 16% of world FX volume. In the United States spot market, the majority of deals are executed between 8 am and 12:00 pm, when European traders are still active.

By Richard Krivo of DailyFX.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Learn forex trading with a free practice account and trading charts from FXCM.

Related Articles on FOREX

Keyword Image
The Fabulous Shrinking Renminbi
09/27/2017 1:13 pm EST

As of August 2015, renminbi (RMB) in payments globally accounted for 2.8 percent of the total, the f...