Currencies are traded as pairs in Forex trading. The Pairs are broken down into groups: majors, minors, crosses, and exotics.

The Majors are the most heavily traded currencies.

• AUDUSD – Australian Dollar / US Dollar
• EURUSD – Euro / US Dollar
• GBPUSD – Great Britain Pound / US Dollar
• USDJPY – US Dollar / Japanese Yen
• USDCAD – US Dollar / Canadian Dollar
• USDCHF – US Dollar / Swiss Franc

The Minors or Crosses are combinations of major currencies not including the US dollar. Due to lower trade volume, these pairs can be more volatile than the majors. The GBPJPY and GBPAUD being examples of very volatile crosses.

Exotic Currency pairs are made up of major currencies paired with emerging or strong smaller economies currencies, such as the Hong Kong Dollar or the Swedish and Norwegian Kroner. These pairs have lower trading volumes than the majors and minors and can have higher trading costs.

Above all, traders should be aware of their trading platform’s timezone.

Forex Trading Hours

The foreign exchange trading day is broken down into interbank sessions. The sessions are in order of open; New Zealand, Sydney, Tokyo, Frankfurt, London, and New York.

Traders mainly follow the major interbank sessions.

• Sydney – opens at 7am and closes at 4pm
• Tokyo – opens at 9am and closes at 6pm
• London – opens at 5pm and closes at 2am
• New York opens at 10pm and closes at 7am.

(All times are AEST and times change depending on daylight savings time on the country.)

Looking at the above graph you will notice sessions overlap. These can the busiest times for traders as deals are done in two sessions at once. The London and New York opens are favorite times for short term traders. Generally, the Sydney open and end of the New York session have the lowest volumes. Traders should be cautious during these stages of the day as moves can be wide due to lower liquidity.

When’s the Best Time to Trade the Forex Market?

Once you gain an understanding of forex market hours you will be able to open positions based on appropriate trading decisions. The FX market opens on Sunday at 5 pm EST and closes on Friday at 5 pm. 

The best time to trade is when the market is most active and this tends to be when markets are overlapping, this is down to an increase in market sentiment which will ultimately lead to fluctuation in FX prices. You can most commonly see movements of 70pips when there are overlapped market sessions opposed to locked spreads when there is only session open. 

An example of an overlapped session is the U.S. and London trading sessions and most trading activity occurs during this period. During an overlapped trading session it’s important to keep an eye on major news releases as this could have a significant impact on price fluctuations.

Why does the FX market operate on around-the-clock trading?

Due to international time zones, the FX market has to trade over a 24-hour period. For example, the GBP closed at a certain rate then it means that’s the price at market close in London. However, the currency will carry on being traded in other sessions around the world long after the London session closes. 

Forex trading starts with Australasia, followed by Europe and then North America. Once one particular session closes the other following will open. There are more active periods of trading that occurs when trading sessions overlap. 

The forex market is made up of the following participants:

• Retail Banks 
• Central Banks
• Hedge Funds
• Retail FX Brokers
• Investment Management Firms 
• Investors and Traders 

Due to the numerous time zones the FX market operates in, it makes it easy to access at any time except the weekend when the FX market is closed. 

London and New York are considered to be the two busiest time zones as they overlap London afternoon and New York morning. This considerably contributes to the vast amount of the volume traded in FX. 

How Does Daylight Saving Time Affect the Forex Market?

Market opening hours will also vary in relation to Daylight Savings Time which takes place during the months of October/November and March/April. Countries such as Australia and the UK will shift to and from daylight savings. This can cause confusion for traders so keep an eye on trading alerts sent out from your broker. 

What are the Most Traded FX Pairs?

The following currency pairs are considered to be the most heavily traded within the FX market. 

• EUR 
• USD
• JPY
• GBP
• CAD
• AUD
• NZD

Traders will look for trading times with the heaviest volume as it means that many brokers will provide them with tighter spreads. This ultimately lowers transaction costs for traders as the bid and ask price shift closer together. Take a look at the spreads Eightcap offers with each financial asset.