One of the many characteristic features of the Forex market is the possibility of being able to invest at any time: Remember, in fact, that the currency market is open 24 hours a day, Monday to Friday.
Specifically, its opening coincides with the morning of Monday in Asia (equivalent to Sunday evening in Europe) to close in the afternoon (Friday evening in Europe).
But What Is The Best Time To Invest In Forex Trading?
First of all you must know that not all countries follow the convention of summer and solar time, adopt, instead, their own conventions, such as, for example, Italy, and this could cause some valuation gaps.
The time zone that is used as a reference point is GMT, or Greenwich Mean Time, to be precise, London time, but it is not always the same. In fact, it is often the clocks in the English capital, which are not synchronized correctly with GMT time, due to the change between daylight saving time and solar time. Specifically, the time coincides with GMT only between October and March, while from April and September London assumes GMT +1 time.
As a result, countries in the northern hemisphere, which adhere to the same convention, are used to move their watches in the same direction, while countries in the southern hemisphere move their hands in the opposite direction.
The Opening Of The Forex Market, Session By Session
Let’s now try to understand how Forex market hours work, session by session.
First of all it must be said that there are three main sessions: Asia, Europe, America.
Let’s see them in detail:
The Asia Session
The Asian session also includes the oceanic financial centres, and refers to what happens in Tokyo, because it is the most important market, but also in Hong Kong, Singapore and Sydney.
Compared to the European and American sessions, trade is rather limited, with the exception of the Japanese currency, the yen, as a major trading currency.
Generally speaking, it can be said that if there are no extraordinary events capable of disrupting the session, there are usually fairly limited movements in currency exchange rates, which only become more pronounced with the start of the next European session.
It is for this reason that analysts generally consider such session, the time area useful to be able to understand how prices stabilize, or in what way the previous trends behave; moreover, it is difficult in the Asian session the start of a new trend, or a sudden reversal, occurs.
The Europe Session
Let us now move on to the European session. As mentioned earlier, London is the global reference point for currency trading, and considering that it is in Europe that the largest currency trades are concentrated, the result will be that the Forex financial market will suddenly become much more liquid and efficient. Volatility tends to increase, providing investors with more trading opportunities.
Instead, with regard to the opening hours of the world stock exchanges in this part of the globe, the session starts at 8 hours with Frankfurt, although the greatest opportunities are present mainly from 9, with the opening of the London Stock Exchange and other continental financial centers.
Therefore, the most important time slot is from 9 a.m., because the European session gets into the swing, allowing traders to invest at their best, following the trend that, presumably, will continue until the opening of the next American session.
Instead, the most traded currency pairs are definitely different: first of all, the protagonists are the euro/sterling pair, then EUR/GBP and, in general, in their exchange rates with the U.S. dollar. Secondly, the open positions on the Swiss franc are also relevant.
The America Session
The American session begins at the end of the European session and there is a so-called overlapping parenthesis. This is the one of intermediate importance between the European one (the main one in terms of trade volume) and the Asian one. It happens that, at the close of the European session, when it is the only American session on the economic calendar, trade is relatively concentrated on USD/CAD.
After 11pm, the Asian session will start again, although it must be said that, in reality, it is an incorrect reference, because the first market to open is in fact the Australian one, but with low levels of liquidity.