The 24-hour forex trading market is divided into three main trading periods: the London session, the US session, and the Asian session. Every significant regional market center has distinct characteristics and patterns that may enable traders to successfully implement strategies at any moment.
Despite the fact that the foreign exchange market is the most liquid of all asset classes, volatility fluctuates with time. A forex trading strategy’s dependability may be increased by comprehending these various forex session timings.
We will examine each of these forex trading market sessions in this post, as well as their essential characteristics, forex time zones, and how they impact trading.
WHAT ARE THE MOST POPULAR FOREX TRADING SESSIONS?
Typically, there are three market periods in the currency market:
- The Asian session (Tokyo)
- The European session (London)
- U.S. session (New York)
During these trading sessions, when major banks, institutions, and small traders are all active, the forex market is seen as being very functional and dynamic. Keeping track of the precise start and end timings of each trading session can help forex traders build their trading strategies around this information.
| SESSION | MAJOR MARKET | TIME (GMT) |
|---|---|---|
| US | NEW YORK | 13:00 – 22:00 |
| ASIAN | TOKYO | 00:00 – 09:00 |
| EUROPEAN | LONDON | 08:00 – 17:00 |
ASIAN TRADING SESSION
The first forex trading session begins in Tokyo, and many significant players utilise the trading momentum in Asia to construct their tactics and use as a predictor of future market dynamics. The Asian trading session sees the execution of around 6% of all FX transactions worldwide.
EUROPEAN TRADING SESSION
With around a 34% market share of the daily forex volume, London is the biggest and most significant forex trading session in the world. Due to the market share, the majority of the biggest banks in the world maintain their dealing desks in London. The London session is more volatile than the other two forex trading sessions due to the big number of participants and high amount of transactions there.
Major currency pairings like the EUR/USD might see a significant spike in their “average hourly move” due to the flood of money streaming in from London. This figure is shown in the chart below dependent on the time of day; note the rise that occurs when the European trading day starts at 03:00 ET (08:00 GMT).
US TRADING SESSION
New York, the second-largest trading hub, conducts over 16% of all FX trades globally. The US/Europe overlap is when New York sees the majority of its transactions, which slow down when liquidity dries up and European traders leave the currency market.
When the market overlaps with Europe and the US, as shown by the green dot on the preceding chart around 08:00 ET (13:00 GMT), the average movement rises even more until London goes offline (denoted by the red dot) at 12:00 ET (17:00 GMT).
WHAT TIME OF DAY IS BEST FOR TRADES?
Trading European currency pairings between 19:00 and 11:00 GMT has shown to be more profitable. Since the US session has little to no impact at this time, as was previously noted, liquidity is rather low. Due to the lesser liquidity, range-bound trading techniques that make better use of indicators like RSI are possible.
Day traders could think about trading the European currencies during the late US session into the Asian session if they like ranges, which are defined as buying at support and selling at resistance (19:00-07:00GMT).
Day traders who like trends and breakouts may want to explore trading when Europe goes online vs when it goes offline (08:00-17:00GMT). Additionally, as it is the busiest trading day for those home currencies (AUD or NZD), trading Asian currencies (AUD or NZD) during the Asian session may also produce some breakouts.
Since such markets tend to move less since they are the currencies’ “off hours,” you will probably find it difficult if you attempt to trade breakouts of European currencies during the Asian session.