Currency trading is conducted within a specific set of working hours. The trading week begins at 5:00 pm EST on a Sunday and ends at 5:00 pm the following Friday. The best time to exchange within this window varies depending on a set of different factors, however, the optimum time to trade is when the market is most active.
Forex trading hours do not adhere to regular business hours like Wall Street. Instead, they are based on four different regions and their time zones. Fully understanding the market can help pick the right time to exchange currency and form a viable profitable schedule.
Hours of Operation
New York
The second-largest forex trading platform on Earth is New York. The market runs between 8:00 am and 5:00 pm EST and is monitored closely by foreign investors as the US dollar is part of approximately 90% of trades. Changes in the New York Stock Exchange can directly affect the value of the dollar instantly.
Tokyo
The Tokyo Stock Exchange opens at 7:00 pm and closes at 4:00 am EST. The majority of Asian trades are conducted via Tokyo with USD/JPY, GBP/CHF, and GBP/JPY currency pairs seeing a lot of action. The USD/JPY is particularly worthy of attention when the Tokyo market is open and others are not as a result of the Bank of Japan’s influence on the market.
Sydney
Sydney’s trading times run from 5:00 pm to 2:00 am EST. It is the smallest of the four mega-markets but there is still a lot of action when the market opens as it is where the trading day officially begins.
London
Trading times for London run between 3:00 am and 12:00 pm EST. London is responsible for over 40% of global trading and as a result, has a large bearing on currency fluctuations. Forex trends frequently begin in London, a fact that is worth bearing in mind when considering what time of day you might wish to exchange currency.
Best Hours to Exchange
As previously mentioned, there are specific times where exchanging is recommended over others. Often this is when the market is at its most active is advisable. When multiple markets are open at the same time, the fluctuation on currency pairs is likely to be more significant.
At times when only one market is open, currency pairs remain more stable, making it a great time to exchange currency if the rate is in your favor. The opening of other markets can cause a lot of movement, especially when coinciding with big news.
Overlaps in Trading Times
The optimal time to conduct exchange currency is during the overlaps in trading times between the major markets. There are higher price ranges when multiple markets are open simultaneously, presenting more opportunities for traders. If you’re still asking yourself “what is the best time of day to exchange currency?”, here is an informative breakdown.
U.S./London Overlap 8:00 am to 12:00 pm EST
The biggest overlap between market trading hours happens between the New York and London markets. Over 70% of exchanges take place during this overlap as the USD and Euro are the top two most popular trading currencies. This is considered by many the best time to trade due to the high levels of market volatility.
Sydney/Tokyo Overlap 2:00 am to 4:00 am EST
The overlap between Australia and Japan’s major markets is not quite as volatile as the previously mentioned New York and London overlap. Nevertheless, there is still a higher than average fluctuation. The EUR/JPY is the optimal currency pair to exchange during this period.
London/Tokyo Overlap 3:00 am to 4:00 am EST
This overlap is shorter than the two mentioned above and occurs at an inconvenient time for many US traders. As a result, the market sees less movement than the abovementioned overlaps.
The Bottom Line
Taking advantage of market overlaps is key to being successful when exchanging currency. These overlaps are important to keep in mind when devising an exchange schedule. If you are looking to get the best daily rates of exchange the many factors here are key influencers of the price fluctuations. Understanding how the exchange rates typically vary throughout the day can help you determine the best time of day to exchange.
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