Understanding the Forex market hours is a key requirement to implementing a profitable Forex trading strategy. The Foreign Exchange markets are often described as providing traders with the ability to trader around the clock with the markets being open twenty four hours per day. While this does indeed provide the opportunity to trade at any time of the day or night it is important for traders to take account of the hours when they look to trade. This is especially important for new traders first starting out as knowing the right time to trade is an important part of trading the markets successfully. Although the Forex markets are open twenty four hours per day, they are in fact divided into a number of distinct sessions. Understanding the market dynamics of each of these sessions can help to dictate the level of performance that you will achieve.
There are three main sessions that you need to be aware of when trading which define the Forex market hours; the Tokyo session, the London session and the New York session. Each of these trading sessions is identified by a trading window which represents the time when the markets are open in each region. Each session has its own unique characteristics and dynamics that define the market action during the session.
For example, regional currencies will tend to be most heavily traded during their local session. This leads to both higher liquidity and higher volatility in these currencies during these periods. Knowing this can help you to select the appropriate currency pairs to focus on at each session. After all if you are ready to trade then you want to ensure that you are going to see sufficient movement to generate you a profit on your trading position.
Of these sessions the London trading session is the busiest and the time when the largest amount of currency transactions are made. European currencies such as the Euro and the Great British Pound tend to be the focus of traders attention during this period. Strategies are employed to take advantage of the specific moves in these currencies at this time.
A common way in which to exploit these moves is to make use of breakout trading strategies at the market open when the session first begins. Traders will tend to look at the ranges formed in previous sessions and decide whether these ranges will continue into the new session or whether the currency pair will breakout into a new range.
Understanding the Forex market hours is key to the implementation of a successful trading strategy.