What You Need To Know About Forex Trading Sessions
Forex trading sessions are the periods of time when some specific currency market is active. This article will tell about the four main trading sessions and describe the features and characteristics of each one. Forex is what we, traders, call the decentralized global market. Every day millions of people, hundreds of brokers and banks from all over the world are making its wheels turning.
Obviously, all they can’t be present in the market simultaneously due to a huge time difference. So the foreign exchange market is divided into multiply trading sessions, the main of which are: Sydney, Tokyo, London, and New York sessions.
Sydney Forex Trading Session (10:00 pm – 7:00 am GMT)
Sydney is one of the biggest Australian cities, located in the East cost of the continent. That’s why it is a place where the trading day begins. Since, during the Sydney session most of the world is already going to bed or still sleeping it turns to be the calmest of the main currency trading sessions. However, it is worth saying that Australia also opens the trading week. That is when you can expect to see some price action, since all traders, brokers, and financial institutions try to balance the Forex market after the weekend.
Sydney session would be a good time for the beginners, since the trading volumes are low, the price movements are inconsiderable, and it is enough time to analyze the situation properly and make the right decision.
Tokyo Forex Trading Session (12:00 am – 9:00 am GMT)
Tokyo session opens while Sydney session is still in the middle of action. Tokyo session is also called Asian, since most of the traders from this part of the world accomplish their operations during that time. Even though the volumes of the Tokyo trading session are higher than during the Sydney one, they still can be considering rather low. Currency prices do not move a lot and most of the time, stay in the tight channel. However, it is worth saying that the spread during Tokyo hours is about 50% to 100% higher comparing to the London session.
Tokyo session would be a great choice for scalper traders, since there are no huge price movements and basic technical analysis along with price action observation would probably be the best strategy to trade during Asia session.
London Forex Trading Session (8:00 am – 5:00 pm GMT)
London trading session is actually the main European session. Tokyo/London overlap is not very longstanding, only one hour. However, during that time, currency prices usually start to move more active. Almost every time during the first hour of London session the price moves in one direction for a bit and then comes back to the opening price. One more difference of European session against the Asian is a tighter spread.
London trading session is great for intraday trading. The best strategy here is trend trading, since most of the time the prices during European session are moving in accordance with existing trends, if there are no high-impact fundamental factors, like breaking economic news that can considerably change the market situation.
New York Forex Trading Session (1:00 pm – 10:00 pm GMT)
It is the main Forex trading session of Western Hemisphere. It is also the most active one. In my personal opinion, it is because US traders always have an extra cup of espresso every morning, or maybe there are some other reasons. However, the fact is that during the New York session, the biggest amounts of currency are being traded (around $100 billion of daily turnover). Almost every day you can observe the considerable price movements during New York trading hours. At the time of London/New York overlap you can often see the daily highest volatility level. At the same time, the US session has the tightest spread.
New York Forex trading session would be great opportunity for the experienced traders, who already know the market well enough and has the specific strategy that works under multiply conditions. It also would be a good time for fundamental currency traders, since the US economic reports often affect the currency prices a lot.
In the conclusion, it is worth noticing that despite all the Forex trading sessions have their own characteristics, it is possible to trade on each of them; however, it requires the knowledge and market understanding. To hold your hand on the pulse of the active trading session as well as the main economic events, check out our free plugin for Meta Trader 4 – FX Pulse 2.0. It will display the Forex trading sessions schedule directly on your chart and provide you with information about the main upcoming economic events.