Best Times of Day to Trade Forex

A quick question! When is the highest TV viewing time？ You guessed it right if you said prime time!

What does a trading session have to do with it？

Well, just like television, “rating” (also called liquidity) peaks when more people enter the market.

So, when do you choose the best time to trade forex？

It is logical to choose while the two sessions overlap.

If you thought so, you would be half right.

Let's discuss some characteristics to see why the two sessions overlap.

Tokyo – London Overlap

Liquidity during this session is rather low for several reasons. There is usually not much traffic during Asian sessions, so it's almost a nap break at noon.

Trading can be cumbersome as liquidity is depleted as European traders are just starting to enter the office.

Now would be the perfect time to grab some cold medicine, play golf, or find potential trade opportunity on sessions in London and New York.

London – New York Overlap

According to the latest data from the forex market information service FXLIQUIDITY, liquidity is optimal at 10:00 and 15:00 London time (10:00 New York time).

That's when the real Chevain begins! At this point you can hear the merchants literally smashing their knuckles, as they know their work is carved for them.

This is the busiest time of the day as traders from the two largest financial centers (London and New York) start fighting for it. During this period, we can see big changes, especially when news reports from the US and Canada are published.

Markets could also be hit by “late” news from Europe.

If a trend was established during the European session, we could see the trend continues when US traders jumped in and established positions after reading what happened earlier.

Finally, it is important to know that the WM/Refinitiv spot benchmark rate is determined during this period.

The rate is set at 4 pm London time, and also known as the “London fix”.

A currency “fixing” is a fixed time each day at which a currency price is set or fixed for commerce purposes.

Currency prices fluctuate from seconds to seconds, requiring daily “checkpoints”.

Banks and other financial institutions use this daily exchange rate to set the exchange rate, which determines the prices used for corporate foreign exchange transactions.

From a trading standpoint, these daily corrections can trigger large trades in the market before the correction time (usually 15-30 minutes) and disappear abruptly exactly on the correction time.

Finally, some European traders may close their positions at the end of the day, which could lead to some erratic movements right before lunch at US.