Forex trading sessions – what is the best time to trade?

Hello, gentlemen traders! You may get the impression that Forex can be traded at any time, since it is open 24 hours. Well, the market is really open 24 hours, but this does not mean that you can trade at any time. This is because the Forex market is not active all day. And if the market is not active, you will not be able to make money, because there will be no significant movements in the market. When should I trade? There are various trading sessions on the Forex market. However, we will not consider the trading sessions of all countries. However, we will focus on the three main Forex trading sessions, as the market is very active during these sessions.

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Forex trading sessions

There are four main trading sessions in Forex trading:

1. The Sydney trading session;
2. Tokyo (Asian) trading session;
3. London (European) trading session;
4. New York (us) trading session.

Schedule of Forex trading sessions

The trading session schedule depends on daylight saving time in the United States. For summer time (from March / April to October / November), the following trading session times are relevant:

EDT – North American summer Eastern time (UTC-4), BST – British Summer Time.

For winter time (from October / November to March / April), the following trading session times are relevant:

EST – North American standard Eastern time (UTC-5).

The tables above show that in some countries there are differences in the opening and closing times of trading sessions. This is related to the transition for daylight saving time and back. From the table above, we can also see that some trading sessions are traded simultaneously. For example, in summer, the Tokyo and London sessions are open from 3:00 to 4:00 Eastern time. Similarly, in winter, the new York trading session and the London session partially coincide from 8:00 am to 12:00 PM EST.

Based on this, it is quite obvious that during the hours of overlapping trading sessions, the market is extremely liquid and volatile, because there is a large volume of transactions on the market. Consequently, most traders prefer to trade during these busy market hours, as they can catch significant price movements.

Let's look at each trading session separately and find out which currency pairs are best suited for a particular Forex trading session.

See also which brokers have the lowest spread.

Asian trading session

Tokyo, the capital of Japan, is part of the Asian continent. The Tokyo session opens at 12: 00 GMT (8:00 EST). Since Tokyo is the financial capital of Asia, the Tokyo session is also sometimes referred to as the Asian trading session.

If we talk about statistics, since the Japanese yen is the third most traded currency, it accounts for 16.5% of all operations on the Forex market. And 21% of all Forex trades occur during this session.

The table below shows the average number of points of some major currency pairs during the Asian trading session.

What do you need to know about the Asian trading session?

Although the trading session is called Tokyo, this does not mean that the market is driven only by Japan. There are millions of transactions from other exchangesother countries, such as Hong Kong, Singapore, and Sydney.

Japan is one of the world's largest exporters. So, along with Central banks, there are exporters who also participate and drive the market.

During the Asian trading session, market liquidity is sometimes low. In addition, most pairs start moving in a narrow range. For this reason, some traders prefer not to trade during this session. However, some traders are preparing to take action in anticipation of a breakout before the session closes.

Moreover, there are a number of traders who do not trade in this session, but they analyze what happened in the Tokyo session so that they can take action in the next sessions when liquidity increases.

What currency pairs should I focus on during the Asian session?

During the Tokyo trading session, news traders can focus on trading currencies such as AUD, NZD and JPY, because it is during the Asian trading session that news about these currencies is received.

Stronger movements can be expected in Asia-Pacific currency pairs such as AUDUSD and NZDUSD, compared to non-Asia-Pacific pairs such as GBPUSD and EURUSD.

Since Japanese companies are actively working with the yen, naturally, we can expect more movement of currencies in a pair with the yen.

China, like Japan, is a major trading player. Thus, whenever news comes from China, it tends to increase market volatility. Moreover, since Australia and Japan rely on Chinese demand, we can expect a significant movement in pairs with AUD and JPY.

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European trading session

At a time when Asian markets are preparing to close their market, European markets are preparing totsya open their trading platforms. The European trading session opens at 3: 00 AM EST (7: 00 AM GMT) and closes after eight hours of intense trading.

There are several financial centers in Europe, but the main trading is concentrated in London. Consequently, this session is often referred to as the London trading session.

London is considered the capital of the Forex market. And it's no wonder that business people make thousands of transactions every minute in this session. Moreover, 30% of global transactions are processed during the London session.

The volatility of most currency pairs during this session is usually very high. The table below shows the approximate number of points in different pairs during the European trading session.

What do you need to know about the European trading session?

The London trading session intersects with two other major trading sessions – the Tokyo session at its close and the new York session at its opening. In this regard, during this time, the market receives a huge amount of money. Consequently, this creates high liquidity and possibly lower spreads.

London is a key financial center, so there is the highest volatility during this session.

During the Asian session, the market usually consolidates and moves in a range. But when the European trading session opens, the market traditionally goes out of range and a trend begins. And this trend usually continues until the new York session opens.

Please note that in the middle of the European trading session, market volatility tends to decrease. The reason for this may be that at this time, traders take a break for lunch. Traders can also wait for the start of the new York session to revive trading.

If the market was trending at the beginning of the London session, this does not mean that it is will continue in the future. The reason for the trend reversal may be that traders fix their profits at the end of the session.

What currency pairs should I focus on during the European session?

During the London trading session, you can choose any currency pairs to trade on Forex, because during this session there is a huge volume of trading.

However, it is recommended to trade only major pairs such as EURUSD, GBPUSD, USDCAD, USDCHF and USDJPY, as these pairs have very narrow spreads. Another reason to stick with these pairs is that news reports about these currency pairs usually come during a given session, increasing their volatility even more.

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American trading session

After five hours of trading during the London session, the Us trading session opens in new York at 8: 00 am EST, when Europeans return from their lunch break.

As we remember, the Tokyo session is known as the Asian session, the London session is known as the European session, and the new York session is also called the American trading session.

As for volatility, the new York trading session is after the London one. In other words, the movement of points on major currency pairs is less in the Us session compared to the European session, but more than in the Asian session.

The table below shows the movement of points in various major currency pairs during the Us trading session.

Based on the table above, we can see that the average movement of points during this session is 62 pips. In addition, the most volatile currency pairs are those with USD and some pairs with JPY.

What do you need to know about the Us trading session?

As mentioned, when the new York session opens, it coincides with the London session. Therefore, you can expect high volatility during this time period.

Economic news usually appears at the beginning of the new York session. And, according to statistics, about 85% of transactions are related to the US dollar. Thus, if there is strong news related to the US economy, it also leads to high volatility in currency pairs with the us dollar.

When European markets begin to close their trades, volatility gradually decreases. This usually happens during the lunch break during the Us trading session.

In the second half of the day on Friday, the trading volume becomes very weak because the start of the weekend for Asians and Europeans.

In addition, on Fridays, there is a high probability that the markets will reverse their direction, as us traders close their positions to stay away from news events over the weekend.

What currency pairs should I focus on during the Us session?

Market volatility during the overlap of the European and American trading sessions is very high. Thus, you can trade literally any pair of your choice. However, it is recommended to stick to the main currency pairs and avoid trading exotic pairs.

News related to those of the United States, can dramatically change the course of the dollar. Hence, news traders should keep a close eye on the US dollar to catch these sharp movements.

If you are just starting to trade on the Forex market, then the American trading session will be more preferable, since its volatility is not as high as during the European session, and not as low as in the Asian session. However, you should refrain from trading during the release of important news, as due to a sharp increase in volatility, your Cdeals can be knocked out by stop loss.

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Conclusions

Thus, we have reviewed the main Forex trading sessions, as well as the schedule of trading sessions. Now you know that the greatest volatility is observed during the European trading session, and at this time you can trade any major currency pairs. During the Us trading session, volatility is not so high, but it can grow sharply during the period of news related to the publication of economic reports in the US. During the Asian session, many currency pairs, with the exception of pairs with AUD, NZD and JPY, can move in a sideways range, so it is better for beginners to refrain from trading. The highest increase is observed trading at the close of the Tokyo and London sessions opening and closing the opening of the London and new York trading sessions.

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