Many active forex traders have noticed that certain times of the day seem to see more price action and trading volume in the forex market. Often, these especially active periods are when the trading sessions of more than one major trading center overlap.

These forex trading session overlap periods will usually offer the highest amount of liquidity and the widest trading ranges in terms of pips. Nevertheless, the degree to which this occurs might vary depending on the currency pair involved since most centers are more active in their local currencies.

Since higher volume, liquidity and trading ranges tend to give short-term speculative forex traders an edge when trading, scalpers and day traders will want to pay special attention to these overlaps that are described further in the sections below.

The European-North American Overlap: 8:00 AM to 11:00 AM

This overlap is the key forex trading period when both the New York and London major forex trading centers are open for business. Trading in all the European currencies is heaviest during this period and offers the most liquidity for currency pairs involving the Euro, Pound Sterling and Swiss Franc.

Such especially liquid overlapping times would include the important 8:00 AM to 11:00 AM period when the major trading centers of New York and London are both open for business. Frankfurt is also open from 8AM until 10:00AM.

Also, if you are trading the EUR/USD, GBP/USD or USD/CHF currency pairs, then the market for these currency pairs would probably be the most active during that period because they represent the major currency pairs involving the United States and European countries.

The Asian European Overlap: 12:00 Midnight to 3:00 AM

Sydney closes at 1:00 AM, while the Tokyo, Hong Kong and Singapore stay open overlapping with Frankfurt and London at 2:00 AM and 3:00 AM respectively. This time period usually offers the most liquidity for the Japanese Yen, as well as the European Yen crosses.

Another good time to trade in order to take advantage of several different markets being open simultaneously, is between 1:00PM and 3:00 AM as Asian and European markets overlap at different points.

The Tokyo, Singapore and Hong Kong forex markets continue trading throughout this overlap period. The Frankfurt and London markets then open at 2:00 AM and 3:00 AM respectively, and they then overlap with Singapore and Hong Kong until 5:00AM.

This time period can see particularly active trading in the USD/JPY, EUR/JPY, GBP/JPY and CHF/JPY currency pairs.

The Australian Asian Overlap: 9:00 PM to 12:00 Midnight

This is the period during which the New Zealand and Australian markets overlap with the Asian markets of Tokyo, Singapore and Hong Kong. This time period tends to have the most liquidity for the Australian and New Zealand Dollars and their crosses.

Trading in Australia and New Zealand overlaps with Tokyo from 7:00PM and then with Singapore and Hong Kong from 9:00PM until Midnight when New Zealand closes and 1:00AM when Sydney closes.

This makes the overlap period from 9:00PM until Midnight especially liquid as Australia, New Zealand, Tokyo, Singapore and Hong Kong are all open.

This overlapping time frame often sees especially active trading in the AUD/USD, AUD/JPY, EUR/AUD, NZD/USD, AUD/NZD and NZD/JPY currency pairs.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.