Wondering when the best time to trade Forex is? Many traders prefer trading during “prime time” when global liquidity is at its highest. More trading activity typically leads to favorable conditions for many traders.

During the week, the forex market runs 24 hours a day (trading is restricted on weekends). Trading is broken into four sessions that correspond with different locations. The sessions include New York, London, Tokyo, and Sydney. These sessions overlap at certain times, and trading volumes are often higher during the overlaps.

As for individual sessions, the London session is typically the busiest, followed by New York.

Globally, the busiest period for forex trading is generally the “London-New York overlap”. This refers to the time when the forex trading sessions for New York and London are both operating at the same time.

Prime Time Trading During the London-New York overlap

The London-New York overlap is usually very busy for traders. For various reasons, traders in New York and London are often more active than their counterparts in Tokyo and Sydney.

Further, since the London-New York overlap is so busy, remote traders, say a vacationing forex trader based in Fiji, may also be more active during the overlap.

Forex markets are generally most liquid from 1 PM to 4 PM Greenwich Mean Time (London), which corresponds with 9 AM to 12 PM in Eastern Standard Time (New York). So, if you want to trade during “prime time” and live in the United States, be prepared for some early mornings.

Keep in mind that the United Kingdom uses British Summer Time, and the United States uses daylight savings time at different points of the year to adjust the day and allow for more daylight.

Ultimately, the London-New York overlap is typically considered prime time among forex traders. If you’re new to forex trading, it’s smart to study the overlap and to trade during these times. As you develop your own knowledge and insights, you may start experimenting with different times.

Don’t Forget the News Cycle

You don’t have to trade during the London-New York overlap. You may develop strategies that work better during non-peak hours. Likewise, if you’re interested in a specific currency, say the Japanese yen, big real-world developments, such as the Japanese government launching a large quantitative easing plan, may also impact markets.

In fact, the news cycle in general is very important for traders.

The United States government often releases indicators and announcements in the morning, for example. These announcements can have a major impact on forex trading both in the United States and around the world. As a forex trader, it’s smart to pay attention to these developments and other news headlines as well.