The forex market is a marketplace so vast and dynamic that it never sleeps. As traders from all corners of the globe continuously exchange currencies, different regional markets’ sessions overlap. Thus, the forex market is open 24 hours a day, offering different levels of volatility and liquidity at different times. Understanding these forex trading sessions in forex is crucial for any trader.
What are the forex trading sessions and what you should know about them This article will review the best times to trade forex and the currencies that are most active during specific forex trading session times. It will also offer tips on how to optimize your trading schedule.
Major forex market sessions
The forex market trades continuously Monday through Friday, assuring that somebody somewhere in the world is trading at any given time. This continuous environment is divided into four major sessions: Asian (Tokyo), European (London), North American (New York), and Pacific (Sydney). Each of these forex trading sessions bears some peculiar features that influence the behavior of traders and the volatility of the market at given times.
Harnessing the particulars of these forex session times, a trader will make wise trading decisions and know how to benefit from market activity and liquid periods.
Clocks showing the time in the four major cities
The Asian trading session
Tokyo session forex time: 12:00 a.m. to 9:00 a.m. GMT
Hong Kong session: 1:00 a.m. to 10:00 a.m. GMT
Singapore session: 1:00 a.m. to 10:00 a.m. GMT
The Asian trading session mostly occurs on the Tokyo market. This session has relatively little volatility compared to the London and New York sessions, so this timeframe is fairly placid in terms of price fluctuation, and lower in liquidity. On the other hand, the Tokyo session is able to provide impeccable opportunities, particularly for traders of major currency pairs like USDJPY and EURJPY.
The Asian session is influenced by economic news and issues from countries like Japan, China, and Australia. It could be the most opportune time for traders to employ forex strategies geared to taking advantage of the relative calm before the opening of the much more volatile European session. The Asian session can also be utilized as a time for planning and market analysis that will have a bearing on other sessions.
London session forex time: 8:00 a.m. to 5:00 p.m. GMT
Zurich session: 8:00 a.m. to 5:00 p.m. GMT
The European trading session lasts from 7:00 a.m. to 5:00 p.m. GMT and sees the largest trading volume of all the sessions, which makes it the most important trading session in the forex market. Overlapping with both the Tokyo and New York sessions, the London session provides great conditions for trading almost all currency pairs at high liquidity levels, making it particularly meaningful to traders.
The London session accounts for about 34% of the daily forex trading volume, making it the most active session.
London is one of the world’s financial hubs, with the largest financial institutions and banks engaging in huge trading activities in the city. These naturally impact the movements of world currencies. Important news from Europe, including the UK, Germany, and the Eurozone, can create massive volatility in EURUSD, GBPUSD, and EURGBP pairs.
These are the most volatile trading hours, characterized by high price fluctuations. The enhanced movements of this session make it easier for traders to use any trend in the market to their advantage. In particular, the period when the New York session overlaps with the most active one (London), is one of the best periods for trading.
The North American trading session
New York session forex time: 1:00 p.m. to 10:00 p.m. GMT
Chicago session: 1:00 p.m. to 10:00 p.m. GMT
The North American trading session is one of the most influential trading periods in the entire forex market. It comes to life at 1:00 p.m. GMT and goes to sleep at 10:00 p.m. GMT. Traders might mention forex trading sessions in Central Time or Eastern Time to clarify local hours, but New York is in the Eastern time zone. Here, we’ll keep it in GMT as the default forex time zone.
As this period overlaps with the close of the London session, liquidity and volatility increase, creating dynamic trading conditions in a lot of instruments and rendering the New York session a hotbed of opportunity.
The New York session is pivotal because the US dollar is involved in approximately 90% of all forex transactions.
Key economic data releases, US corporate earnings reports, and geopolitical events, might greatly influence the dynamics of the exchange rate. During these forex market hours, the volatility of major currency pairs like EURUSD, GBPUSD, AUDUSD, and USDJPY tends to rise.
Traders can exploit the New York session by focusing on major currency pairs, while simultaneously keeping pace with important US economic indicators. These include the number of people employed in the non-agricultural sector, GDP reports, and Federal Reserve statements. At the end of the New York session, position adjustments are most often noted in comparison to before the opening of trade, which creates potential trading opportunities.
The Pacific trading session
Sydney session: 10:00 p.m. to 7:00 a.m. GMT
Wellington session: 9:00 p.m. to 6:00 a.m. GMT
The Pacific trading session runs from 10:00 p.m. to 7:00 a.m. GMT. It’s the first session of the trading day, and marks the start of the trading week when it begins on Sunday.
This session is generally less active than the others, with lower volatility and smaller trading volumes. It’s mainly focused on trading currency pairs involving the AUD and NZD. Economic announcements from Australia and New Zealand create notable market moves, but overall, this session is quieter, with more gradual price changes.
Even though it’s not as fast-paced, the Pacific session has its place, especially for traders looking to position themselves ahead of the more active European and North American sessions.
Key characteristics of each forex trading session
Here are the main takeaways about trading periods:
FX trading sessions
Key characteristics
Asian trading session
Starts with the Tokyo session and tends to have lower volatility
Key for trading pairs with the Japanese Yen
Influenced by economic data from Asia
Often sees trading in AUD and NZD
Sets the tone for the week, especially on Sundays
European trading session
Known for higher volatility and more liquidity
Dominated by major financial centers like London and Frankfurt
High liquidity means quicker price changes, especially with news releases
Closes the trading day and shows the week’s trends
Pacific trading session
Includes the Sydney session, which is less active than others
Focuses on pairs with the Australian dollar
Marks the start of the trading week on Sundays
Lower trading volumes mean slower price movements
Australian economic news impacts the market during this session
How forex market schedules overlap
Overlapping forex sessions
The overlap period between the London and New York sessions, 1:00 p.m. - 4:00 p.m. GMT, is a time of heightened liquidity and volatility. Many transactions are made during this window, opening wide opportunities for profit. Positions in these overlapping trading sessions should be focused on major currency pairs like EURUSD, GBPUSD, and USDJPY, which normally become very active.
From 7:00 a.m. to 9:00 a.m. GMT, the overlap between the Asian and European sessions brings increased market activity. But it’s not as volatile as the London-New York overlap.
The Pacific (Sydney) and Asian (Tokyo) sessions overlap from 12:00 a.m. to 2:00 a.m. GMT, but this doesn’t have much impact on the global markets.
Some forex brokers offer their version of forex trading sessions time zone indicators, which show active trading sessions around the world. But since there are only a few key sessions and their overlaps, it’s relatively easy to memorize them.
For forex traders, timing is everything. The best time to trade on the forex market is when the market is at its most liquid and volatile. Usually, these times coincide with the periods of overlap between the main trading sessions. Follow the detailed information below to learn the best time to trade forex:
Start by trading the Asian session
Asian session chart
As you can see from the forex trading sessions chart above, the Asian session goes from 12:00 a.m. to 9:00 a.m. GMT, opening first every trading day. Although this session is marked by less forex volatility than the European and American sessions, it still gives strategic opportunities.
The best time to trade during the Asian session is in the early morning hours of 6:00 a.m. to 8:00 a.m. GMT because the market action heightens as it approaches the overlap with the European session’s opening.
At these times, currency pairs like EURJPY and USDJPY show a lot of action, especially on economic news from Japan and other Asian markets.
Continue with the European session
European session chart
Opening at 7:00 a.m. and closing at 4:00 p.m. GMT, the London session is also pivotal for all traders, as it is associated with immense volumes and high volatility.
This period overlaps with the Tokyo session from 7:00 a.m. to 9:00 a.m. and with the New York session from 1 p.m. to 4 p.m. GMT.
At this time, the EURUSD, GBPUSD, and EURGBP currency pairs become especially active and gain the most forex liquidity. This is ideal for traders looking to take advantage of huge market fluctuations that generally occur after releases of economic news from both the UK and the eurozone.
End with the American session
American session chart
The New York session lasts from 1:00 p.m. to 10:00 p.m. GMT and is considered one of the more volatile sessions.
It is especially volatile during the overlap with the London session from 1:00 to 4:00 p.m. GMT.
During this period, the US dollar, which is party to most forex transactions, drives big changes in the market. EURUSD, GBPUSD, and USDJPY are all key currency trading pairs. Publications of United States economic data, from employment reports to GDP data, can be very sudden events that create a market reaction and hence a profit opportunity for traders.
How to use news and economic events in trading sessions
You can use news and economic events in trading to anticipate market shifts and decide on entries and exits, which is especially helpful in short-term strategies like day trading or scalping.
Discover proven short-term trading strategies and how to implement them for better market performance.
Key things to consider:
Identify indicators like interest rates, GDP, and inflation, that reveal economic health and potential market direction. For instance, central bank rate increases are positively correlated with currency strength, and rate cuts are negatively correlated.
Monitor events like geopolitical tensions, natural disasters, and elections, that cause market volatility. Conflict or tensions, like those between major oil-producing countries, drive up oil prices. This strengthens oil-exporting currencies (like the US dollar), while weakening currencies of countries heavily dependent on oil imports (such as the Japanese Yen).
Set alerts to react quickly to breaking news and minimize delays and emotional reactions. You’ll get trading signals on key events and won’t have to monitor the markets constantly.
Importance of economic calendars
Economic calendars show when important events are coming up. Traders can then adapt their trading strategies to potential market moves, plan when to enter or exit trades, and stay updated on economic trends.
For instance, the FBS calendar shows important economic events and political news, and analyzes how they might affect the market. It tells you when key data will be released, which currencies could be affected, and how big the potential impact could be. Things change quickly in the world of trading, and it’s helpful to have something to help you prepare.
FAQ
What are the main foreign currency trading sessions?
These are the Asian session (Tokyo), the European session (London), the North American session (New York), and the Pacific session (Sydney). The European and American sessions are the most active.
How do trading sessions affect market volatility?
The Pacific and Asian sessions tend to have lower market volatility because they are the first to open and have fewer active traders. The European and North American sessions are much more active and volatile.
Why are overlapping trading sessions important?
When two major sessions overlap, more markets are open, which leads to faster price movements and higher trading volumes for an extended period. The best overlaps happen between the European and North American sessions.
What time does the Asian trading session start?
The Asian trading session starts at 12:00 a.m. GMT with the Tokyo session.
How can news events impact different forex sessions?
Economic events impact trading by causing price changes and higher volatility. In the European and North American sessions, for example, important events like US GDP reports or European Central Bank decisions can cause big price moves, affecting forex, stocks, and futures.
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