3 Major Forex Trading Sessions
This is because it moves from one country to another. With this 24-hour cycle, a trader can buy and sell currencies at any point in time, since minimally one market in the world is always open. We can divide the major Forex trading sessions into three major sessions:
The Asian Session -
this covers Wellington, Sydney and Tokyo trading activity. Sydney opens at 10:00 P.M. and closes at 7:00 A.M. GMT. Tokyo opens at midnight and closes at 9:00 A.M. GMT.
The European/London Session -
trading volume is highest during this session, constituting over 37% of all trading activity throughout the world. London opens at 8:00 A.M. GMT and closes at 5:00 P.M. GMT.
U.S./New York Session -
this is the final session of the day, and it overlaps with the European/London Session. New York opens at 1:00 P.M. GMT and closes at 10:00 P.M. GMT.
When Is It Best to Trade Forex?
The perfect time to trade Forex is during overlaps in trading times between open markets. Overlaps equal higher price ranges and it results in greater opportunities. For instance, trading the EUR/USD and GBP/USD pairs between 8:00 A.M. GMT and 12:00 P.M. GMT — a time when two markets for those currencies are active - would give good results.
At those overlapping hours, you will find the highest volume of trades and therefore more opportunities to win in the foreign currency exchange market. Take a closer look at the three overlaps of the trading sessions that happen each day:
New York and London: between 1:00 P.M. — 5:00 P.M.GMT
Sydney and Tokyo: between 1:00 — 7:00 A.M.GMT
London and Tokyo: between 8:00 A.M. — 10:00 A.M GMT
Another important thing to remember is that whilst it is certainly a 24-hour market, it is not one that remains constant. Trading volumes are not always equal throughout the entire day. Therefore, your trading plan must be considered, as different trading sessions can be more or less volatile.
While understanding the markets and their overlaps can aid a trader in arranging his/her trading schedule, a big news release has the power to impact a slow trading period. When a major announcement is made regarding economic data, a currency can appreciate or depreciate in value within seconds. In the upcoming chapters we will look into news trading and how to fit it in your trading strategy.