How Do Forex Market Hours Influence My Trading Strategy and can help forex market open indicator
In this article you will read about trading sessions. You can download free indicator “Forex Market Open indicator MT4” (download Forex Market Open Indicator). read more about indicator in this article.
You’re familiar with forex, who make the market operate, why it is good to trade forex. Now you need to learn to when you can and should trade. That is, you should have a thorough understanding of the market session.
The market sessions in the forex market are a sort of schedule framed tacitly by the forex market participants to sell, buy and speculate on currencies round the clock.
Maybe you know that the global currency market is not influenced by anyone single market exchange. It involves a network of brokers and exchanges round the world.
The forex market session happens in different places at different times because the market operates in multiple time zones.
In this context, you need to get familiar with various kinds of trading sessions. You may be aware that the market is accessible round-the-clock. This, however, doesn’t mean that the market stays active the whole business day.
As you may be aware, the forex market is operational round-the-clock from Monday to Friday. This happens because the time is different in different parts of the globe. When the trade goes on in a certain part of the world, the other part may be asleep. By this, the market stays operational as traders in one part of the world leave, the void is filled by traders in other parts. Thus, the forex market is running because of the forex market hours.
How is it possible?
As a beginner, you might have heard that the forex, you might have received marketing material saying the market is operates the whole day all the days of the week. It’s a matter of common knowledge for traders dealing equities or other tradable entities known that markets and stock exchanges operate simultaneously with banks on a business day. On the other hand, the foreign currency market is decentralized and therefore highly flexible and operates round the clock.
Despite such operational timings, the forex market is a global market that spans from the main financial centers such as Tokyo and Sydney in the East to all those in the Westernmost part. Each of them operates in a different time zone. Thus, when Tokyo traders leave for home, New York banks are still closed.
Thus, the foreign exchange market works in different time zones. You can access it anytime you like. Forex traders with reasonable experience have the notion of forex market hours. In Sydney, trading starts at 0700 hours, as per the Australian standard time, which is 10 hours earlier to GMT.
Currencies, the volume of trade and time zones – How are they related?
It’s important to note that at the global level, the forex market is influenced largely by banks, companies that deal in export and import of goods and services, hedge funds, various central banks and retailers in forex.
Let’s take a hypothetical example to explain how all this happens. A trader struck a deal last week in Mitsubishi, Japan and an Australian car distributor who is planning to buy 200 cars (SUVs). As per the agreement, the Australian importer is to settle the amount under the invoice on the first trade-hour of Monday. Now, once Tokyo banks start working, the importer will have to change their Australian dollar to Japanese currency to pay for the cars to the exporter of Japanese cars.
As the amount to be paid is a bit big, the desire to buy Yen spurts resulting in a sudden rise in its price on Monday. By this, traders will be bullish for Yen and bearish for the AUD.
This is a plain example to bring clarity on why prices of forex keep on moving. Also, there might be trends created as it happened with Yen in the example. As the number of transactions increase, Yen and will experience more volume of trade. All this results in currencies command more price as compared to those at banks.
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In this indicator you can simply choose from 65 various markets time sessions.
Why should I focus on trade during particular market hours?
There is a central exchange to deal forex market, nevertheless, you can trade forex any time during the week you like.
It’s important to note that to participate in forex trade, you require a counter party. Thus, to buy anything you require another individual to sell particular goods or service. The situation is in the forex market is akin to his scenario.
If you’re planning to buy USD against JPY at midnight when no trader in Japan or the USA is awake, then it’s probable that is a difficult time to do business. Therefore, it’s advisable to participate in trade during designated trading hours. There are no adequate number of sellers and buyers in the market during the time.
Of course, there are a few brokers who trade during the weekend. Yet the pair currencies do not move appreciably. If you’re a short-term trader who deals forex during a day during business hours, and then closes, it is’ similar to doing trade in the weekend. Thanks to large institutions (financial) and traders not playing their role there might not any remarkable market trend.
Therefore, the forex market gets influenced when principal financial market players at a particular time participate in trade and the liquidity volume is high. This reduces the ask price and bid price difference and is useful for traders to get their orders fulfilled easily without suffering loses.
Why do some forex hours last longer than others?
When an individual from the United States wants to convert $200 into British pounds at a London airport at midnight, it is tantamount to a forex transaction. But as the time is midnight, no cross-border transaction will take place. Transactions that influence markets happen among big banks, hedge funds during the business hours.
It’s also important to note that not all the big bank branches participate in forex trade.
For instance, a Bank of America small branch does not participate whereas one in NY participates. Similar is the case of banks in major Asian markets.
Banking time in the dominant financial centers, time zones in the USA and other important markets cause a sizeable trading in the forex market.
Further, banks in currency trade, financial institution investors, hedge funds also create a large volume of forex transactions. Hedge funds having with considerable international experience buy a large amount of stock globally and to accommodate their portfolio properly.
Likewise, the main stock exchanges also participate in trade. The classic examples are NASDAQ and NY Stock Exchange.
Thus, cross border investments invoicing moving funds globally contribute immensely to the growing foreign exchange magnitude in the market. Coupled with this, banks stock exchanges’ participation in the trade to grow to gigantic proportions
You can choose foreign market hours according to your strategy
In many cases, forex trades trade during the day and according to the time zones and the location of the financial center.
While your trading strategy doesn’t change, your trading strategy about when to participate in trade can help you avoid wasting time. If there is no trading opportunity in trade, the most important thing you have to consider in forex trading is the timing. This is because trade can often largely influence profitability. When you know when to exit the market, it will help to make a workable strategy.
Forex market hours according to strategy-2: Exit at London trading
The London forex accounts for close to 30 % of the volume of trade – largest of all for markets session in the world. It’s for this reason that major fluctuations happen during London trading sessions.
If you’re planning to exit the trading strategies, you can choose breakout at the beginning of London market. To exit, you will have to trade for a short duration time frame, for example, charts of 5 minutes or 15 minutes.
At the beginning of the London session, it is similar to any other instance. But when the trading volume is substantial it makes sense to exit – a lucrative option.
Forex market hours – intraday trading in the post-lunch session of the London session
By the time the New York market opens, the market in London is already ahead. this is good because the volume of trade reaches peak by the time NY market opens.
Many of the short term traders prefer to trade in the post-lunch London session. This is because, at this time, both the large markets are open. More importantly, high liquidity in the market is advantageous for short term traders having a low volume at the time so that they can reduce the transaction cost.
The conventional investment environment avers volatility as the risk of forex trade is high volatility. However, if there is no volatility, it may lead to hardly any profits.
If you wish to be successful, you must know the hours when the market is most active when the volume of trade is super high.
When banks, commodity exchanges, there is a lot of liquidity created.
Under the situation, you must depend on a combo of technical parameters that determine the trading signals. Alternatively, you could become a trader acting based on prices. In any case, you must know well about forex market hours to achieve success.
In the forex market, you can earn money when the market is in moving fast or even when it is declining. You’ll face the toughest situation when it does not operate at all. In such a case, you cannot make money at all. This article makes you understand when it is best to trade. In other words, it will present the best market session when you can maximize your profit.
Forex market time sessions in our Forex Market Open Indicator for MT4
Before getting familiar to the most suitable time to participate in trading, you must consider knowing how a round-the-clock business day in the forex would appear.
The forex market is split into four principal market sessions, namely the Tokyo session, the Sydney session, the New York session, and the London session.
The actual operating times are according to local business time, and most market hours begin between 0700 hours to 0900 hours local time.
The opening and closing times are also different in October/November and March/April sessions as it is in counties like the USA, Australia and the UK and change to/from daylight saving time.
The timings in Spring/Summer in the USA are as follows:
In Sydney the open time 07:00 hours, closing time is 16:00 hours.
The corresponding Eastern Daylight Time (EDT) 17:00 hours and 02:00 hours.
And in British Summer Time (BST) the times are 22:00 hour and 07:00 hours.
The Tokyo session opens at 09:00 hours and closing time is 18:00 hours (local time).
The corresponding time in EDT 20:00 hours and closing time is 05:00 hours.
And, in BST, the timings are 01:00 hours and 10:00 hours.
The London session begins at local time 08:00 hours and closes at 16:00 hours.
The corresponding time in EDT is 03:00 hours and 11:00 hours.
And, in BST the timings are 08:00 hours and 16:00 hours.
New York (NY)
The NY forex market session opens at 08:00 hours and closes at 17:00 hours.
The corresponding times in EDT are 08:00 hours and 17:00 hours.
And, in BST, the timings are 13:00 hours and 22:00 hours.
The timings in the USA in Fall/Winter as follows:
The Sydney session opens at 07:00 hours and closes at 16:00 hours.
The times in EST are 15:00 hour and 24:00 hours.
And in GMT, the times are 20:00 hours and 05:00 hours.
The Tokyo session opens at 09:00 hours and closes at 18:00 hours local time.
The matching time in EST is 19:00 hours 04:00 hours.
And, in GMT the times are 24:00 hours and 09:00 hours.
The London market session opens at 08:00 hours and closes at 06:00 hours local time.
The corresponding times in EST are 03:00 hours and 11:00 hours.
And, in GMT the timings are 08:00 hours and 16:00 hours.
The NY market session starts at 08:00 hours and closes at 17:00 hours.
The times in EST 08:00 hours and 17:00 hours.
In GMT, the times are 13:00 hours and 22:00 hours.
In a month, the day when a country moves from/to DST also change. This leads to more confusion. Note that Japan does not take into account day savings. Thus, the Japan system of markets is so simple.
When it comes considering Sydney Open, it’s apt to wonder when the market shifts by two hours as per Easter time zone.
It’s important to note that the Sydney session will be one hour forward by the time USA session adjusts for the standard time. However, if the USA moves one hour back, the Sydney session will move forward by an hour. You need to take this into account if you’re planning to enter trading this time.
Further, you should also take into account the time between a pair of forex trading sessions; there is also a time when two sessions are operating simultaneously.
Trading during summer
In summer, the London session and Tokyo session generally overlap. This happens during 0300 hours and 0400 hours ET.
Further, in both winter and summer, the NY and the London sessions overlap during 08:00 hours to 12:00 hours.
In general, these are the times when the market is most crowded on any trading day thanks to the increased volume when to two markets operate simultaneously.
This is because, during the aforesaid times, each of the the participants in the market is wheelin’ and dealin’. It implies that an increased volume of money is a passing from one account to another. The NY session and London session overlap.
The importance of session overlapping
The busiest of all trade zones are NY and London. The time when these to trading sessions overlap (NY morning and London afternoon), the largest volume of trade is generated on a single market. This period is important because during the period the WMR/Reuters benchmark spot rate of foreign exchange is estimated.
The rate set at 1600 hours (local time) is used for meaning the daily volume of trade and as a price for pension funds and money managers.
A final word
Forex trade sessions are highly decentralized, they function efficiently as a transfer mechanism for all the participants. It’s best for those who participate in speculation in any part of the globe. To succeed in the forex market, and earn profits consistently, make sure you understand the market sessions happening on the business day at each session including all the (London, Tokyo, Sydney, and NY). This will help you put your money in the market optimally.
In our Forex Market Open Indicator for MT4 you can choose 65 markets sessions.