Understanding Forex Market Hours and Forex Hourly Tendencies
Learn how forex market hours and sessions affect your trading. Each hour of the day, and each forex pair, has different characteristics based on what global markets are open. Understanding these characteristics means you’ll be better able to find and filter trades, and apply your strategies at the correct time.
Some background knowledge is required to trade forex effectively. While the forex market trades 24-hours, not all hours are viable for all day trading strategies. Which markets are open around the world at different times of day greatly affects the liquidity and volatility of forex pairs. Trying to apply a volatility-based strategy at sedate times of the day isn’t efficient. Just as trying to implement a range-trading type strategy during volatile trending times is likely to result in frustration.
Discover the major forex market sessions and their impact on different currency pairs. Going beyond this, see the hourly characteristics of each major pair so you can fine-tune your strategies to the pair and time you are trading.
Forex Market Sessions
Currency pairs and success in trading are greatly affected by which markets are open at specific times around the globe, and how those times are traded (or not traded).
The EURUSD, for example, is most liquid and sees increased movement when London or New York are open for business. Liquidity and volatility are generally highest during the “overlap” period when both New York and London are open. Same goes for the GBP/USD and USD/CHF.
The USDJPY is most active at the start of the Tokyo and New York sessions…which are separated by about half a day. The AUDUSD and NZDUSD have a similar structure, since the Sydney market is fairly small, and activity picks up when Tokyo opens a couple hours after Sydney.
Since the Canadian Toronto and the US New York markets are open at the same time, the USDCAD typically sees the most liquidity and volatility as New York and Toronto open.
The underlying theme is that currency pairs are most active and liquid when at least one of the countries (or zones) associated with that currency pair is open for business.
Here are forex market hours/sessions based on different time zones (you may need to adjust for daily light savings time…see link below to confirm times)
Figure 1. Forex Market Hours GMT:
Figure 2. Forex Market Hours EST (New York)
Figure 3. Forex Market Hours PST (Los Angeles, Vancouver)
If your time zone is not here, you can quickly find what times the sessions open in your local time zone by using this tool–interactive forex market hours tool. Please note, your broker/chart time may not be the same as your local time zone. Therefore, to find out when sessions begin and end on your chart, make sure the time on the tool (little green box) matches up with the current time in your charting platform. When daylight savings time kicks in, make sure you are using the correct market hours.
The charts above only show major markets, as most smaller markets typically overlap with these major ones. Germany opens 1 hour before London, therefore some consider it to be a more official open and the start of the European session.
Forex Market Hours – Forex Hourly Tendencies
While there are general tendencies for intra-day volatility and liquidity, as discussed above, and each hour of the day has its own characteristics. Ideally, your day trading strategy should be suited to those intra-day characteristics. Trending strategies, and strategies designed to capture volatility, should be exercised during the most volatile hours of the day. If you face time constraints and the hours you wish to trade aren’t volatile in the pair of your choosing, possibly another pair will provide volatility during the hours you require it.
If your strategies are based more on ranges or quieter markets, focus on lower volatility times of the day. Once again, exploring the hourly tendencies of a basket of currencies may expose opportunities which more efficiently utilize your strategy.
The charts below show hourly volatility for major currency pairs. Over time these statistics will change. While overall volatility changes over time, relative volatility stays close to the same. For example, certain hours of the day will almost always be more volatile than others, even though the average pip movement within those hours is subject to change. For other forex statistics, see the Daily Forex Stats page.
Stats as of August 30, 2018.
Figure 4. EURUSD Hourly Volatility (average of high price minus low price, for that hour, in pips)
Charts by Mataf and all times in GMT.
Trending opportunities occur between 0600 and 1900 GMT, with 0600 to 0800 and 1200 to 1500 providing the biggest hourly moves. Strategies revolving around ranges or quieter markets are best suited for trading between 2100 and 0600 GMT.
The USDCHF has a similar volatility structure as the EURUSD.
Figure 5. USDCHF Hourly Volatility
Figure 6. GBPUSD Hourly Volatility
Figure 7. USDJPY Hourly Volatility
Figure 8. AUDUSD Hourly Volatility
Due to their close proximity, the NZDUSD has similar intra-day volatility as the AUDUSD. Both pairs also have similar overall volatility each day.
Figure 9. NZDUSD Hourly Volatility
Figure 10. USDCAD Hourly Volatility
Since the Canadian and US markets are open at the same time, liquidity and volatility are focused near the open of those markets, and then tapers off for the rest of the day.
Capitalizing on Forex Market Hours and Forex Hourly Tendencies – Final Word
Developing a strategy is one thing, utilizing that strategy efficiently is another. Traders should have a well laid out trading plan that defines when will they trade, and when they won’t. Certain hours will benefit particular strategies. Figure out which hours will best serve your strategies. Check out different pairs on the Daily Forex Stats page to find a good match–there are many tools on that page that can help you accomplish this.
If trading on a short time frame, I recommend using an ECN broker that has a near zero spread. This will allow you to more efficiently exploit opportunities during the hours of your choosing since the spread won’t be of concern.
Check out the Forex Trading Strategies Guide for Day and Swing Traders eBook.
More than 300 pages packed with strategies and trading info you need to succeed. Available via instant download.
By Cory Mitchell, CMT
Forex Day Trading with $1000 (or less) – A blueprint for how to build an income with a small trading account, by effectively utilizing risk controls, leverage and trading on a small time frame for a few hours a day.
Day Traders: How and Why to Use a Daily Stop Loss – Controlling daily losses is as important as controlling losses on each trade, here is how day traders can control their daily losses so a single day doesn’t ruin their weekly or monthly income.