The best time to trade on the forex market.
So you have started to learn Forex and think of entering the market soon or later. Along with the basic things that you might have learned, you might have heard about the schedule of Forex market which is different from one region to another. So, when is the best time to trade on the Forex market?
Actually, the best time to trade on foreign exchange is the time when the market has the most volatility or activity. When more Forex traders are active, the difference between the asking price and the bid rate or known as the trading spreads is likely to narrow. When it happens, less of your money will go to the market maker.
The Reason to Trade on Active Markets
The busy
trading Forex market almost always creates better trading experience. But, there is one more good reason to trade when the market is active the most: volatility. As a consequence of the Forex’s four main exchanges including London, New York, Tokyo and Singapore, when there are more than one exchange is available, the trading volume is not only the one increasing, the volatility too.
Even though most investors frequently afraid of volatile markets, the level and rate at which a currency price changes actually indicates good news for Forex traders. If there is no volatility, price will remain constant and your trading won’t be profitable. At this point, volatility has its own risk but also comes with best opportunities.
The Worldwide Forex Market Hours
When we are talking about Forex markets, it is best to know that the Forex has 15 independent exchanges around the world. All of the markets stay open for 24 hours in five days a week on the weekdays. Each exchange has different trading hours. For example, when it comes to London exchange, it opens at 3 am to 12 pm.
The Overlaps of Forex Trading Hour
Even though every exchange has different schedule and they are independent to the other, they actually trade the same currencies. The result is that when there are two of big exchanges (London, New York, Singapore and Tokyo) are open, the amount of traders who actively purchasing and selling currencies on the market are significantly improving too.
When it happens, the bids and asks of one market exchange can get reflected right away in the bids and asks of the other available exchange. It results reduced market spreads and increased volatility. Considering the schedule of Forex market hours, there are some overlaps schedule on the major exchange’s trading hours as listed below.
• At day
At day especially from 8 am in the morning through 12 pm at noon EST, there will be two major exchanges open: the London and New York Forex market. After that, there is also overlap trading hour between Singapore and New York from 3 pm to 5 pm when both exchanges are open at the same time.
• At night
At night during 7 pm through 12 am midnight EST, there are Tokoy and Sydney market exchanges which are open at the same time. In addition, during the early morning from 3 am to 4 pm EST, there is overlap trading hour of Tokyo and London exchanges for they are both open through the similar schedule.
These overlaps trading hours commonly make the best times for traders to trade on the Forex market. Among the overlap hours, the most preferred trading time is found to be at 9 am to noon when London and New York exchanges are overlapping open. For further you should learn Forex trading in advance to use this information more properly.