When to Trade Forex

Figuring out what time of the day to trade forex is one of the most important considerations. Th are basically three worldwide markets (times) to trade, though there are many different dynamics.
Realize that forex is always trading, some brokers even allow weekend and holiday trading. When the sun comes up over a certain city, people wake up and start trading. Hedgers may make transactions with banks during regular business hours and more trades may also correspond loosely with securities markets. But overall there is no official New York or Tokyo market opening for forex. Having said this though London, New York, and then Tokyo are respectively the largest volume forex markets. If you are in New York volume picks up around 8am stays very liquid until noon (London is still open until then). The Tokyo market starts trading closer to 9am in Tokyo (around 6pm eastern time) and the London markets open around 8am in London (1am eastern time). These three markets make up the largest volume markets, but notice also that when other markets near 8am locally you may see volume spikes (maybe three large European cities start trading at once (say Frankfurt, Paris, and Geneva as an example).

Volume also tends to be highest when the three largest forex markets overlap. New York and London overlap from around 8am eastern time till around 11am. Also Tokyo and London Overlap from 1am eastern until about 3am. So overall the character of the forex market is quite complicated, you always have to look at the big picture to figure out the character of the market. Also you need to keep in mind that local economic announcements for a particular country might affect the market. News (for example, a tsunami) can also affect the forex market.