Forex Bid and Ask Prices

All Forex currency are quoted in pairs such as EUR/USD and include both a bid and ask price. The bid price is always lower than the ask price.

The first listed currency in the pair or the one to the left of the slash is called the base currency and the second currency or the one to the right of the slash is called the quote currency. In our example above the EUR is the base currency and the USD is the quote currency.

The bid price for each currency pair is the price which the dealer is willing to buy the base currency in exchange for the quote currency. This means the bid is the price which you will receive when you sell the currency pair. The ask price for each currency pair is the price which the dealer will sell the base currency in exchange for the quote currency. This means the ask price is the price you will pay when you buy the currency.

The difference between the bid and ask price is commonly referred to as the spread.

A Forex trading technique known as fundamental analysis is used to help you determine whether you should buy or sell a specific currency pair. Using the EUR/USD example above, if you belief that the US economy is weaken which causes the dollar to go down in value, you would want to place a Buy EUR/USD order with your Forex broker. By placing this trade, you belief the euro will rise in comparison to the US dollar. If you belief the US economy is strong and the euro will weaken, then you would want to place a Sell EUR/USD order. This means that you anticipate the euro going down in comparison to the US dollar.

Currency Trading Hours

One of the benefits of currency trading is that the market is open 24 hours a day. This allows individuals who want to trade in currencies to trade during normal business hours, after work or even in the middle of the night. During currency trading hours there are times when the prices are consistently volatile and periods when it is muted. Also, different currency pairs exhibit varying activity over certain times of the trading day due to the general demographic of those market traders who are on line at the time.

Currency trading hours are considered a 24 hour market which offers an advantage for many individual traders because it guarantees liquidity and the opportunity to trade at any time during the day or night, it also has its drawbacks. A trader can only monitor a position for so long. There will be times when an opportunity is missed or even worse, when a jump in volatility will lead the market to move against an established trade when the trader isn't around. To minimize this risk, a trader need to know when the currency market is typically volatile and decide what times are best for their trading strategy and style.

Currency trading hours is separated into three sessions during which market activity peaks: the Asian, European and North American sessions. These three sessions are also referred to as the Tokyo, London and New York sessions. These three cities represent the major financial centers for each of the regions. The currency markets are most active when these three sessions are conducting business.

The Asian (Tokyo) market is live from midnight to 6:00 a.m. Greenwich Mean Time (GMT). China, Australia, New Zealand and Russia are also present in the currency market during this time. Because of the range of these different markets, the beginning and the end of the Asian session are stretched beyond the standard Tokyo hours. Allowing for all these different currency markets, Asian hours are often considered to run between 11:00 p.m. and 8:00 a.m. GMT.

Just before the Asian currency trading hours come to a close, the European (London) session opens to keep the currency market active. Official business hours in London run between 7:30 a.m. and 3:30 p.m. GMT. However, currency trading hours for this session are expanded because of the other capital markets including Germany and France. The European hours are typically seen as running from 7:00 a.m. to 4:00 p.m. GMT.

By the time the North American (New York) session opens, the Asian markets have already been closed for several hours. Canada, Mexico and some countries in South America also trade during the North American session. It shouldn't be a surprise that activity in New York City marks the high in volatility and participation for this session. The North American currency trading hours unofficially begin at noon GMT. With a considerable gap between the close of the North American currency markets and open of the Asian session, a lull in liquidity sets the close of New York market trading at 8:00 p.m. GMT as the North American Session close.

Forex Market Hours

A trader can't track every single movement on the Forex market because it is basically open 24 hours a day. It is important for a trader to know when they can expect high market movement. Knowing the different Forex market hours, will help traders implement the best strategy for successful trading.

Forex Market Hours

The Asian Session (7:00 p.m. - 4 a.m. EST) - You can successfully day trade the yen during this time period. The USD/JPY (U.S. dollar/Japanese yen) is a good trading pair for this session. This period is not as volatile as the U.S. session or the European session, but it is possible to trade during this session and achieve a good performance.

The European Session (2:00 a.m. - 12:00 p.m. EST) - This is one of the best trading periods in the Forex market hours. Because most of the large banks are located in London, the majority of major Forex transactions are completed during this trading session. During these Forex market hours you can implement a successful strategy trade on any currency pair.

The U.S. Session (8:00 a.m. - 5:00 p.m. EST) - This is another great session during the Forex market hours to implement a successful trading strategy. You can expect good volatility on any currency pair.

The best Forex market hours for trading are when both the European and U.S. sessions are open. Both of these sessions are open together between 8:00 a.m. and 12:00 p.m. EST. During this time period volatility is good in all currency pairs. Some of the most important economic releases appear during this period, and this will bring good opportunities for Forex traders.