There isn't a day that goes by that I don't get at least 2 emails with traders asking me when is the best time to trade forex.  With that in mind…

I just had a trader in Australia pass this article on to me.  It does a great job of explaining when are the best times to trade forex.

You can't expect to trade well if there is no-one to trade with. So timing is very important. Sure you will hear that the markets are open 24 hours a day. But some hours are better than others..

First, the day is split into several sessions. The sessions are most often measure according to EST (GMT-5) or GMT. If you're on the west coast of America, then you're dealing with PST (GMT-8). Below are the FOREX sessions.

Session	EST	GMT	PST
Open Tokyo	7PM	0:00	4PM	Asian Session
Tokyo Close	4AM	9:00	1AM
London Open	3AM	8:00	12AM	European Session
London Close	12PM	17:00	9AM
NY Open	8AM	13:00	5AM	American Session
NY Close	5PM	22:00	2PM
Sydney Open	3PM	20:00	12PM	Oceania Session
Sydney Close	11PM	4:00	8PM

Traders can expect more volume during the hours when more than one session is active.

Be careful not to trade during periods of low volume. At such times, the market can stall/consolidate for long periods, or make surprising/sudden unexpected moves. Spreads can increase, slippage increases, and stops are more easily hit.

An active market with high volume is more efficient, and you have an improved probability of entering and exiting a trade at the price that you want.

Generalities can be dangerous, so here are a few to get you started;

The Asian session:

Trading can sometimes be in a "narrow range". Currency pairs with the British pound are the most active at this time: GBP/JPY, GBP/CHF.

The rates of USD/JPY, AUD/USD, NZD/USD pairs and their cross-rates too are quite active at this time because the orders are not available in the American session allowing smoothly flowing transactions in Asian currencies.

Traders sometimes avoid exposure on pairs containing the Euro before the opening of the London session.

For "active" traders the most beneficial can be USD/JPY, GBP/CHF and GBP/JPY as their wide range can provide to short-term-traders profit opportunities. The pairs like USD/JPY, GBP/USD and USD/CHF - are a good choice as they allows the middle-term-traders and the long-term-traders to consider a fundamental method of analysis for decision-making.

The European session:

At 8:00 - 17:00 GMT the trading session opens in London. London is one of the major shopping centers of the world with a market share, of at least, 30 % and a trading volume of $580 billion. The volume of the participants and their volumes of transactions render London a most volatile session FOREX.

Traditionally at the London session, pairs including the pound and the euro are most prominent. The Pairs USD/CHF, USD/CAD and EUR/USD are also fairly active and give the market some revival. The pairs based on JPY, lose the appeal within the session, so do not attract active traders.

The American session:

The New York trading session operates from 13:00 till 22.00 GMT. The New York orders are very liquid and account for 14 % of world volume of the transactions. In the spot-market of the USA the majority of transactions are made between 13.00 and 17:00 GMT when the European traders are still active. After the European session closes trade often decreases.

USD/CHF, GBP/USD, USD/CAD and EUR/USD are the most active trading pairs during the New York session and provide the liquidity.

Attention should be paid the pairs EUR/GBP and EUR/CHF, as during the change of session's, their liquidity dissipates and does not increase before next day's opening of the London session. As a result the "narrow range" market can make the fluctuations unprofitable for the trader.

The busiest days:

The most active Forex trading week days are usually: Tuesday, Wednesday and Thursday. The early part of the week is when traders are mostly watching and analyzing the market to determine price direction. Fridays are traded approximately till noon EST, after that it slows down until market closing at 5 pm EST.

 Source: Neal Hughes