Forex Trading Sessions

The forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day. You can trade 24/5 between 22:00 GMT Sunday – 22:00 GMT Friday. It’s time to learn about the different forex trading sessions.

What is a ‘Trading Session’?

A trading session is a period of time consisting of one day of business in a financial market, from the opening bell to the closing bell. Within the time frame of the trading session, all orders for the day must be placed, and buyers and sellers both participate in setting current market prices.

There are 4 main forex trading sessions with opening/closing hours based on the biggest financial centers.

When to Trade?

Time is money. For this reason, in the 24-hour forex market, timing is critical. Good timing produces good profits. Yes, but which are the best hours/times to trade?

The hot zone is between 13.00 GMT and 16.00 GMT. This is the time when the London and New York sessions overlap.

What makes these hours powerful?

• Volume- a large number of lots are sold/bought for a particular currency pair.
• Volatility –  the price moves at a great speed.

Because they reach their peak during these hours! During this time, the market is busy with active participants, currencies move very quickly, and the most important economic news is also published in this time period.

Open and close times will also vary during the months of October/November and March/April as some countries (like the United States, England and Australia) shift to/from daylight savings time (DST).

Now let’s look at the characteristics of each of the trading sessions.

Asian Session (22:00 – 08:00 GMT)

• The Asian session begins with the Sydney open (22:00 GMT) and ends with the Tokyo close (08:00 GMT).
• Japan is the world’s third largest forex trading center and even though we call it the Tokyo session, this is not the only busy forex hub during this period. Hong Kong, Singapore and Sydney are active players here, too.
• The most traded currency is the yen, of course, covering 16.5% of all forex transactions.

Now let us have a look at the main features of the Tokyo session:

• Approximately 21% of all forex transactions are carried out here
• Liquidity (i.e. currency sold without causing significant price movements) can be quite thin at times
• Because of this thin liquidity most currency pairs will trade within a range, especially if there is a big move in the preceding New York session
• Most activity takes place at the beginning of the session, as this is the time when economic news is released
• As during the Asian session economic news from Australia, New Zealand and Japan come out, you will most likely see stronger moves in pairs that contain JPY, AUD and NZD.

London Session (08:00-16:00 GMT)

• London is considered the capital of forex and although there are several financial centers all around Europe, it is London that attracts the main interest as the key financial center.
• Has a huge trading volume (over 32% of all forex transactions are carried out here)
• Has high liquidity
• Is the period with most market uptrends and downtrends
• Has lower spreads
• Volatility (i.e. overall price fluctuations) slows down a bit in the middle of the London period (for the simple reason that most traders are off for lunch) until the New York trading session starts
• Market trends may at times reverse just before the session ends as European traders decide to lock their profits.

New York Session (13:00-21:00 GMT)

• When the London session traders come back from lunch, the New York (US) session starts.
• Roughly 19% of all forex transactions are carried out here
• Big market-moving potential: 85% of trades involve the US dollar
• High liquidity in the morning hours when it overlaps the London session
• Most economic news reports are released at the beginning of the session
• Liquidity and volatility decrease during the afternoon hours
• Little movement on Friday afternoon + high chances for trend reversal in the second half of the day.

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