Forex trading is solely dependent on the exchange rates and is also highly reliant on the time of the day, trading is done at. Fuad Ahmed, a currency trading expert describes that foreign exchange rates have a tendency to fluctuate all round the clock, irrespective of the time. However, he suggests that there still are best hours to trade when chances to get profitable returns from a deal are high. Mr. Ahmed tells that after analyzing millions of trades by major FX brokers, he came to realize that each hour of the day has a different effect on the returns of a trade. He emphasizes that many traders fail, because they choose the wrong time of the day for trading.
Fuad Ahmed explains that the best time to trade is when the markets are active and since most of the successful trading sessions that are conducted during late US time and early Asian or European time. The best hours to trade can be from 2 pm to 6 am Eastern Time, which is 7 pm to 11 am UK time.
The 4 Major Forex Exchanges
There are 4 major forex exchanges that rule the world. It is recommended that a trader takes part in only the most active financial markets as they produce the best results for the investor. The New York forex market is the most active market in the world followed by London, Singapore and Tokyo. If any two of the four exchanges are opened, the trade volume automatically increases and hence the volatility. If the markets are volatile, it is only then that a trader is at the risk of losing money and its also the same time when markets provide traders the room to make profit from their volatility.
The Hours Forex Markets are Operative.
There are fifteen independent exchanges present in the world. These exchanges work 24 hours, from Monday through Friday. Because of the geography, these exchanges open and operate at different hours. The trade flow in various markets at different hours determine their importance in the global financial scene.
London: 3 AM to 12 PM
New York: 8 AM to 5 PM
Singapore: 3 PM to 12 AM (midnight)
Tokyo: 7 PM to 4 AM.
Forex Trading Hours.
All exchanges in the world work independently but, since forex trading is about purchasing one currency against another, it always takes into account the activity of more than 1 exchange.
Whenever the two of four exchanges are opened and operating simultaneously, the trade volume increases because the number of traders multiply and buying and selling of currencies is at its peak.
Looking at the exchange hours, it can be said that two trading markets come to trade at the same hours.
8 AM to 12 PM (noon) EST, the time when both London and New York exchanges are working.
3 PM to 5 PM, hours when both New York and Singapore exchanges are working.
7 PM to 12 AM (midnight) EST, time when both Tokyo and Sydney exchanges are operational.
3 AM to 4 AM EST, time when both Tokyo and London exchanges are operational.
The Best Forex Trading Hours.
The hours when these 4 markets overlap with each other is the best time for trading. The best time is 8 AM to 12 PM, when both New York and London Exchanges are open. These two exchanges control 50% of the total trade in all 15 exchanges of the world.
There are several geopolitical and other events in the world that are responsible for price fluctuation in the forex market. These situations can occur at any hour of the day and influence the forex rates. For instance, the hour between 5-6 pm EST is not promised to give low or high returns yet any abnormal activity in the market can lead the trader to either make billions or bear a heavy loss.
Best is not only the profitable.
In all the above paragraphs, readers have been urged to choose the best hour of trading. Many people mistake best with profitable, which is not always the case. A trader is advised to follow guidelines and make the deal or withdraw it when he deems the time is right for him. This placement and withdrawal doesn’t always mean a profit from the original price but it can be receiving a price from transaction which is not lower than the original price.
If a trader is beginning to trade, he should move forward with caution. According to a Citibank report, many traders start trading and almost 84% of them believe they can make great amount of money. But, only 30 percent reach a breakeven or generate more than the invested price.
Forex trading is a risky business. A trader can either make high profit or lose even the basic investment in currency trading. so, he’s always advised to follow guidelines and do trading in the hours when the probability of receiving profit is high.