What is Daylight Saving Time (DST)?
Daylight Saving Time is a clock convention in which some countries set their clocks forward by one hour in spring and back by one hour in autumn. The aim is to shift an hour of daylight from morning to evening during the warmer months, but the practical result for traders is that local times used by exchanges, economic releases and broker servers can change relative to one another. Not every country observes DST, and the dates when clocks change differ between regions, so the global market’s daily schedule shifts twice a year for many traders.
Why DST matters in the forex market
Forex is a 24-hour market because trading moves around different financial centres as the business day follows the sun. Because DST changes the local clock in some places but not others — and because those changes happen on different dates — the relative timing of major trading sessions and economic events shifts. That affects when two markets overlap, which is important because overlaps are usually the times of highest liquidity and often higher volatility. It also affects the local clock times of scheduled economic announcements, broker server hours, and any automated schedules you use for orders or algorithms.
A concrete example: the London–New York overlap
To make this concrete, consider the overlap between the London and New York sessions, which is a key period for major-pair trading. Under standard time, London’s business day typically runs roughly from 08:00 to 17:00 UTC and New York from about 13:00 to 22:00 UTC, so the overlap is roughly 13:00–17:00 UTC. When the United States moves its clocks forward in spring a couple of weeks before much of Europe does, New York’s session shifts to what looks like 12:00–21:00 UTC from the perspective of traders who haven’t adjusted their schedules. That temporarily moves the London–New York overlap to 12:00–16:00 UTC. A few weeks later, when Europe also begins DST, the overlap returns to its prior slot in UTC terms. The same kind of temporary mismatch can occur in autumn when clocks move back at different times. For traders, this creates a handful of transitional days each year when the usual “busy hour” is shifted by an hour.
Practical effects you may notice
When session times shift, several trading conditions can change in visible ways. Liquidity and volatility during an overlap can arrive an hour earlier or later than you expect, which matters for entry and exit timing. Economic data and central bank announcements that are tied to local time zones will be released at different UTC hours during mismatch periods; that can move a news-based strategy into a different session. Some brokers update their server clocks at different moments or display platform times in local time zones, which can cause apparent changes in spread behaviour or execution latency. Automated systems and scheduled orders can also be affected: if a script is set to run at “08:00 local”, which local zone is that? Without careful handling, algorithmic systems or scheduled hedges can run at the wrong UTC time around DST transitions.
How to prepare and adapt
Begin by treating DST changes like any scheduled market event: plan for them in advance and check the details. Confirm whether your broker adjusts its server time and whether their trading hours change for particular instruments. Update your economic calendar to show announcements in UTC or in your preferred reference time so you don’t miss a release. If you use automated strategies or VPS scheduling, convert all timestamps to UTC inside your code so the logic is unaffected by local clock changes. Finally, consider widening stop distances slightly and being cautious with market orders during the first trading days after a DST shift; spreads and slippage can be less predictable while market participants adjust.
Practical steps to take before DST changes:
- Check broker announcements and adjust your platform time display if needed.
- Convert important news release times to UTC and set reminders.
- Test automated strategies on a demo account around the transition.
- Use a market-hours clock or platform indicator that shows session overlaps in your timezone.
- Be conservative with order placement for the first few sessions after a shift.
Risks and caveats
DST rules and dates are set by governments and can change; some jurisdictions have abolished DST altogether, and others may alter transition dates. That means the pattern you relied on one year may not hold the next. Brokers also differ in how they display times and when they apply DST updates to server clocks; always verify with your provider. Algorithmic systems that mix timezones or store timestamps in local time are particularly vulnerable to errors; industry best practice is to use UTC internally and only convert for display. Finally, remember that market conditions — volatility, spreads and liquidity — are shaped by many factors beyond DST, so time shifts are only one variable among many. Trading involves risk; this information is educational and not personalised advice.
Key takeaways
- DST changes shift the local clock across regions, temporarily moving session overlaps and the UTC timing of news releases.
- Mismatch periods (when one region has changed clocks and another has not) usually last days to a few weeks and can alter liquidity windows.
- Confirm how your broker and platforms handle DST, convert important times to UTC, and test automated systems on a demo.
- Trading carries risk; use proper risk management and do not take this as personalised advice.
References
- https://www.babypips.com/learn/forex/forex-trading-sessions
- https://www.oanda.com/us-en/trade-tap-blog/trading-knowledge/when-is-the-best-time-for-forex-trading/
- https://www.puprime.com/understanding-forex-session-times-hours-overlaps-and-strategies/
- https://easyindicators.substack.com/p/how-daylight-saving-time-affects
- https://fxglobe.com/daylight-saving-times-dts-2025-changes-to-trading-hours/
- https://www.stocktitan.net/articles/daylight-saving-time-effects