Making Sense of Forex Trading Sessions and Time Zones

One of the many draws of Forex trading is being able to participate in a 24-hour market. Nonetheless, when you start learning about Forex trading sessions and time zones, you might find yourself feeling a little overwhelmed. To make it as simple as possible, we have put together this FX market hours guide.

When is the Forex market open?

The foreign exchange market is open five days a week for 24 hours a day. It closes for the weekends.

This is convenient, because it means that you can participate in the market at any time of day or night.

That said, if you are a day trader or scalper, you are going to want to focus your trading around the Forex trading sessions. These are segments of the day when most of the action is taking place.

You should also note that the Forex market observes two public holidays: Christmas and New Year's Day. On these days (December 25 and January 1), the market is closed.

What are the Forex trading sessions?

There are four major trading sessions for the foreign exchange market. These are:

• The Sydney session
• The Tokyo session
• The London session
• The New York session

Sometimes, you will hear the phrase Asian session or Asia-Pacific session. This refers to both the Sydney and Tokyo sessions together.

The Sydney session is the first to open as the weekend comes to a close, because Monday morning starts there before it does elsewhere around the globe. That means that for many traders around the world, the market reopens when it is still Sunday in their local time zones.

Trading sessions sometimes overlap; those overlaps can change depending on whether it is summer or winter, due to daylight saving time considerations.

What is the role of daylight saving time (DST)?

Now, we need to start talking about daylight saving time, also called summer time in some parts of the world.

In a lot of countries, clocks are set forward during summer, usually by one hour. This has the effect of making it get dark "later" than it would have otherwise.

A mnemonic for remembering how the time changes work is "Spring ahead, fall back."

• In spring, people move the clock time forward by an hour (i.e., losing an hour).
• In fall, people turn back the clock by an hour (i.e., gaining an hour).

Here are a few more important things to know about daylight saving time:

• Many countries observe DST, but not all countries do. Japan, for example, does not.
• "Summer" happens in the Northern and Southern Hemispheres during different times of the year. Some countries observe DST when the Northern Hemisphere enters summer, and others do it when the Southern Hemisphere enters summer, depending on their locations.
• The exact dates when DST begins and ends do not always match up from one country to another.

Don't worry if all of this is confusing. Lots of people find DST confusing.

What are the summer trading hours for Forex?

Now that we have laid the basic groundwork to understand daylight saving time, we can discuss summer and winter trading hours for the different Forex sessions.

The summer trading hours start in April and run into October.

Of course, if you are not in the EST or UTC time zone yourself, you will need to do the math to figure out the hours for your time zone.

What are the winter trading hours for Forex?

Now let's take a look at the winter trading hours. These begin in October and end in April.

When do different regions switch to daylight saving time?

It is important to be aware that not all regions or countries change their clocks at the same dates and times.

For example:

• United States: DST begins on the second Sunday in March at 2:00 AM, and concludes on the first Sunday in November.
• European Union: summer time begins on the last Sunday in March at 1:00 AM UTC, and ends on the last Sunday in October.

So, the United States enters daylight saving time before the EU does. But it also remains in DST longer than the EU remains in summer time.

What happens when your zone switches, but the trading session's zone hasn't?

Let's imagine you live in the United States, but you tend to trade the London Session. During part of the year, your time and the London Session will both be on standard time, and during another part of the year, your time and the London Session will both be on DST/summer time.

But there will also be brief periods where this is not the case. Let's say it is the second Monday in March. That means DST has begun for you in the United States, but the London Session is not yet on summer time.

In other words, you have moved your clocks ahead by an hour, but the European Union and the United Kingdom has not. The gap between your time zone and the London Session's hours will have temporarily widened.

This is just something you need to be aware of as you are trading throughout the year, so you do not get mixed up.

What to know about the trading server's time zone?

Finally, there is one more thing you need to account for when considering Forex market hours and time zones, and that is the impact of the trading server's time zone.

Let's say you are looking at an H1 candle at the 15:00 chart time. If your time zone is the same as the trading server's time zone, then that is 15:00 for you as well.

But if you are in a different time zone than the trading platform, the 15:00 you see is for the platform's time zone, not your own. You will need to look up the time zone for the trading platform to know what that 15:00 means in terms of your own clock time.

Remember, everything we have discussed with respect to summer and winter time changes applies to your trading platform's time zone as well.

Summary

Forex trading sessions and time zones can leave you scratching your head due to the many factors you need to account for when understanding the market hours.

To review, here are some key questions to ask yourself:

• What is my time zone?
• What is my trading platform's time zone?
• What sessions do I trade?
• Is my time zone in DST/summer time, or not?
• Is the session's time zone in DST/summer time, or not?
• What are the dates for the next changeover in DST for my time zone and for the session's time zone?

It is a lot to keep track of, and it will seem complicated at first. But over time, you will build a strong awareness of the time zones and time changes and how they impact you. Eventually, it will seem second nature.

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