Forex market is open 24 hours a day and for 5 days in a week. In a way, you could say that it is a market that never sleeps.
For day traders this presents with so many opportunities to place trades or make profits during any time of the day. But, this does not mean that you should trade anytime!
Forex Trading time has been divided into different sessions, and not every time is the best to open or close your trades. There are times during the day when the currency prices are trending but there are quiet hours as well. You need price movement & trends to provide you with opportunities to make profits.
Price action in forex depends on the volume and volatility in the market. In the forex market, volume refers to the number of lots being brought or sold in a particular currency. And volatility refers to the speed at which price moves. You can’t make money if there is no price movement visible. The goal here is to pick the most suitable time to trade based on your trading strategy, and get the most out of your trades.
A global forex market can be split up into three sessions. There are three major forex trading sessions in the world – The Asian Session, European Session and American session. Major financial hubs in the world represent these 3 Trading sessions.
The markets function when these three sessions are in business and, the financial institutions, banks, corporations etc. conduct their major transactions during their time zones. Forex Market Hours are similar to local business hours, i.e. the open time and close time range.
Here’s a breakdown of the major trading sessions & their trading hours for Nigerians (Lagos Time):
|Trading Session||Nigerian Time (GMT +1)|
|Asian Session||12:00 AM to 09:00 AM|
|London Session||08:00 AM to 05:00 PM|
|New York Session||02:00 PM to 11:00 PM|
In many cases there is overlapping of 2 Trading sessions generally during the closing of one session & the opening of the other.
For example: The London Session is open from 9:00 AM to 5:00 PM (Nigerian time) – & the New York Session Opens at 2:00 PM . So when the New York Session opens the London session is in progress (but almost about to close). In this example, there is any overlap of 3 hours between the London & New York sessions.
When two sessions are simultaneously open & overlap, there are even higher volumes generated. This is because participants from both time zones are placing buy/sell orders. Hence the changes in price are visible in the market during sessions with high trading volumes. There are times when trading sessions between Tokyo, London and New York overlap, and volume spikes are visible during these times since traders from both the time zones are active during those hours.
3 Forex trading sessions and their market hours in Nigeria time zone:
While trading forex it is essential to understand the features of each trading sessions. So, let’s look further.
Asian markets account for around 20% of the daily forex trading volumes. The major participants are traders from Japan (3rd largest forex trading centre in the world by volume), Australia, Hong Kong & Singapore. It is open from 01:00 AM to 10:00 AM.
The main characteristics of the Asian Session are:
Globally, European session is the largest financial session in the world. Trading in this session contributes to around 37% of the total daily forex traded turnover. The major participants are from London (contributes to almost 31% of global trading volume) & Germany. The London market opens at 8:00 AM and closes at 05:00 PM (Nigerian Time).
The main characteristics of the London Session are:
After London, New York is the Second largest session in the world. The New York session contributes to around 17% to 18% of the total daily forex trading turnover. Major participants are traders from America and Canada. The forex market in New York session is open from 02:00 PM to 11:00 PM (Nigerian Time).
The main characteristics of the New York Session are:
Nigerian traders should trade during the opening hours of the London session – 8:00 AM to early New York session hours till 5:00 PM Nigerian time.
This is the time when the liquidity is highest for major currency pairs like EUR/USD, GBP/USD etc. Trends are common during these hours & also there are lots of chances to close positions profitably in short time. So it is perfect time for day trading.
For example: If you want to trade JPY then you might want to trade during the Asian session as well for picking the movements.
So practice first on demo account to figure which hours of the day best suit your trading strategy. Only after you have found a working strategy, you should then trade live in those hours.