Forex Market Hours - 4 Points You Should Be Aware Of - By: Matthew John

One of the hyped facts about the forex trading by the brokers is the market hours. It is marketed as a 24 hour market. Many people naively trade the currencies believing that they can get good returns merely because they can trade for more time. But new traders should understand the fallacy behind this logic. You should understand the true Forex market hours.

The Three Sessions of Forex Trading

There are broadly three sessions that form the forex market hours. The three sessions are called Asian, European and US sessions. The names are given according to the peak activity of particular region. Asia contribute majority of trades during the Asian session. Same is true for European and US session. The three sessions share certain time with the next session known as overlap time. As more people trade during the overlap time, volume increases during such time. Local currency is traded predominantly during each session. You will find that Euro and Pound are traded heavily in the European session.

Low Liquidity

The forex market hours start in Sydney on Sunday evening or night depending on where you live. The market closes for the week when New York finishes on Friday. Forex market is open round the clock. You should understand if it is of any use to you as a trader. Even though the market is open 24 hours it is not active during certain period of the day. The time between New York close and Sydney open is very dormant as compared to other times. The liquidity dries up. Market moves mostly because of the trades facilitated by the businesses and not the traders.

High Cost of Trade

The cost of the trade should be less especially if you are a scalper. During this time the spread is high. You have to pay the spread of 4-5 pips even on major pairs like EUR/USD. The high spread also acts as a false signal to trade. If you have placed a pending order to buy, it might get triggered due to high spread. At other times this trade may not have happened. So you have to be careful. It is not profitable to trade the market any time of the day.

Market with Low Volume

For profitable results, you should trade only during the busiest forex market hours. During this time, the volume picks up. If you want to make money, you should play when there is volatility in the market. High volatility times are towards the end of Asian session and entire European and US session. The market is calm during other times. You need to wait for the market to pick up the things.
It is the fact that forex market is open 24 hours. But forex market hours should not be the reason why you should trade the forex. You should know the fine details of the market. You will know these details as you spend time in the market. It is very risky to venture into something like forex with real money when you don’t know much about it. Till then trade with the paper money.

About the Author

Read more about trading on the right time in swing trading strategy. For the very best partner to support your trading activities, check out HotForex brokerage.

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