What are the Forex Market Hours?
Forex market hours are the schedule by which forex market participants can buy, sell, exchange and speculate on currencies all around the world. The forex market is open 24 hours a day during weekday hours, but closed on weekends. With time zone changes, however, the weekend gets squeezed. The forex market opens on Monday morning at 8 am, local time in Sydney, Australia (which equates to Sunday night at 7 pm, in New York City, under Eastern Standard Time), and closes at 5 pm local time in New York City (which equates to 6 am Saturday morning in Sydney). During these hours the traders in the forex market can execute trades though trading conditions vary.
- The Forex market is available for trading 24 hours a day except for weekends
- The Forex market is decentralized and driven by local sessions, four in particular: Sydney, Tokyo, London, New York.
- Trading volume varies from one session to another.
- The highest trading volume occurs when the London and New York session overlap.
- Spot prices for the day are set during the London/New York overlap period.
Understanding Forex Market Hours
International currency markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, as well as retail forex brokers and investors around the world. Because this market operates in multiple time zones, it can be accessed at any time except for the weekend break.
The international currency market isn't dominated by a single market exchange but involves a global network of exchanges and brokers around the world. Forex trading hours are based on when trading is open in each participating country. While the timezones overlap, the generally accepted timezone for each region are as follows:
New York 8am to 5pm EST (1pm to 10pm UTC)
Tokyo 7pm to 4am EST (12am to 9am UTC)
Sydney 5pm to 2am EST (10pm to 7am UTC)
London 3am to 12 noon EST (8pm to 5pm UTC)
The two busiest time zones are London and New York. The period when these two trading sessions overlap (London afternoon and New York morning) is the busiest period and accounts for the majority of volume traded in the $5 trillion a day market. It is during this period where the Reuters/WMR benchmark spot foreign exchange rate is determined. The rate, which is set at 4pm London time is used for daily valuation and pricing for many money managers and pension funds.
While the forex market is a 24-hour market, some currencies in several emerging markets, are not traded 24 hours a day. The seven most traded currencies in the world are the U.S. dollar, the Euro, the Japanese yen, the British pound, and the Australian dollar, the Canadian Dollar, and the New Zealand Dollar, all of which are traded continuously while the forex market is open.
Speculators typically trade in pairs crossing between these seven currencies from any country in the world, though they favor times with heavier volume. When trading volumes are heaviest forex brokers will provide tighter spreads (bid and ask prices closer to each other), which reduces transaction costs for traders. Likewise institutional traders also favor times with higher trading volume, though they may accept wider spreads for the opportunity to trade as early as possible in reaction to new information they have.
Despite the highly decentralized nature of the forex market it remains an efficient transfer mechanism for all participants and a far-reaching access mechanism for those who wish to speculate from anywhere on the globe.