You can trade currencies at any time of the night or day. Monday through Friday, the forex market never sleeps. Nevertheless, there are some times of day that are better than others for most traders.
Most traders prefer to get involved in the market at the busiest times of day. This is especially true of day traders and scalpers. They are looking for plenty of activity so that they can get in and out of a market in a short time and still make a good profit. It is less important for longer term traders, but if you plan to use day trading strategies at all you will need to know the busiest times for forex trading.
So which time slot has the most forex trading activity? The answer, not surprisingly, is the 3 hour period when it is business hours on both of the top two currency trading floors. These are London and New York.
Although the British pound is not the most heavily traded currency (it comes fourth after the US dollar, euro and yen) the London market is the most active. Most of the major European financial powers including Switzerland and Germany are within one hour time difference of London.
New York is of course the home of the US dollar, and it is the second busiest currency trading center. Eastern Canada is in a similar time zone. Business hours here are 8 am to 4 pm EST. London is five hours ahead, so at 8 am EST it is 1 pm in London and the trading day has three hours left to run.
Therefore, the busiest forex trading hours are 8 am to 11 am EST, which is 1 pm to 4 pm British time. Of course, this is not the only time that you can trade. If you are unable to get online at those times, you will certainly find other opportunities. However, it could be good to get as close as you can. For example, if you live in the eastern USA and cannot trade during New York business hours because you have a regular job, consider trading in the early morning before you leave for work. The London market opens at 3 am EST.
On the other hand if you are in Britain or continental Europe and cannot get online during business hours in your own country, the evening will be better for you because New York will still be open. The New York market closes at 9 pm British time, or 8 pm Central European Time.
For anyone just starting out with forex trading, it is best if you can get online during some of the busier times of day. Quiet times are not easier or less stressful. In fact, during times when there is very little activity in the market, or if you are tempted to trade a less common currency pair, you will find that price movements can be much more unpredictable. Spikes happen with frightening regularity and can knock out your stop losses, leading to many small losses. It is better to stay with the crowd and trade currencies during busier times.
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