Forex Trading takes place 24 hours 5 days a week. It starts from 23.00 (EST) Sunday and closes at 24.00 (EST) Friday (trading server time). The time zone in forex trading is referenced in terms of Eastern Standard Time (EST).
Currency trading involves global exchange of currencies all around the world. When forex trading stops in one part of the globe, it opens in another part.
Here trading time does not follow the same time as is the case in other trading markets like the stocks and commodities. If one part of the world goes to sleep, the other part awakens.
When forex trading activity closes with the onset of darkness in one part of the world, it starts in other places with the onset of daylight. Thus, when there is night in Tokyo and Fx trading stops, it is daylight in London and forex activity starts. When London moves towards closure, trading in New York comes to life.
Along with the closing and opening of different forex markets at different times, volume of forex trading also changes. There is a brief lull in trading at certain times while other times are quite brisk.
Major centers of forex market are Wellington, New Zealand, Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfort, London and New York. For time zones, we mostly concentrate on Japan, London and New York.
Timings in New York are from 8 am to 3 pm, G. Britain 3 am to 11 am, EUR 2 am to 10 am, Japan 8 pm to 3 am, Australia 7 pm to 2 am. The time is EST.
The volume of overall foreign currency trading on each trading day is the highest when British, European and US markets are open at the same time, that is from 1 pm (GMT) to 4 pm (GMT) or 8 am to 11 am EST.
The daily volume of forex trading peaks and troughs does not remain uniform all through 24 hours. The volume in Japan and Hong Kong markets remains less than when European, London and New York markets are open.
1.30 pm to 4 pm EST is considered to be the slowest trading time. There is a lull in trading from 4.30 pm to 5.30 pm EST.
One should avoid trading between 5.30 pm to 7.30 pm as other parts of the world are just opening up. Activity picks up from 8 pm when Japan opens.
It is important that one selects the most active times for fx trading. As a general rule, we can say that 8 pm to 11 am (15 hours) will be the best period for currency trading. This is a general guideline and is quite flexible.