Forex Market Hours - 4 Facts You Should Know Of

One of the hyped facts about the forex trading by the brokers is the market hours. It is marketed as a 24 hour market. Many people naively trade the currencies believing that they can get good returns merely because they can trade for more time. But new traders should understand the fallacy behind this logic. You should understand the true Forex market hours.

The Three Sessions of Forex Trading

Forex market hours are divided into three sessions. The three sessions are called Asian, European and US sessions. The names are given according to the peak activity of particular region. During the Asian session, the Asian markets are very active. Same is true for European and US session. The three sessions share certain time with the next session known as overlap time. As more people trade during the overlap time, volume increases during such time. Also normally during each session, the activity in the local currency is at the peak. You will find that Euro and Pound are traded heavily in the European session.

Lack of Market Activity

Sydney kick starts the forex market hours on Sunday. The market closes for the week when New York finishes on Friday. Forex market is open round the clock. But you should understand how it will benefit you as a trader. Even though the market is open 24 hours it is not active during certain period of the day. The time betwee
US close and Asia open is normally calm. The liquidity during this time is thin. Trades that took place during this time are mostly the trades of exporters and importers as opposed to the market participants such as traders.

High Spread

The cost of the trade should be less especially if you are a scalper. During this time the spread is high. You have to pay the spread of 4-5 pips even on major pairs like EUR/USD. The high spread also acts as a false signal to trade. A pending order may be filled due to high spread. At other times this trade may not have happened. So you have to be careful. It is not profitable to trade the market any time of the day.

Low Volatility

For profitable results, you should trade only during the busiest forex market hours. During the active market you get the volatility. You can easily make money in high volatility market. European and US sessions and the closing hours of Asian sessions are the busiest times. At other times there are subdued moves. So you will have to wait patiently till the volatility increases.
It is the fact that forex market is open 24 hours. But you should not trade the forex just because of the forex market hours. You should know the fine details of the market. You will know these details as you spend time in the market. It is very risky to venture into something like forex with real money when you don’t know much about it. So the best way is to trade virtually till you get comfortable.