The 24-hour forex market is divided into three main trading sessions: 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 implement strategies successfully at any moment.
Even though 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.
In this post, we will examine these forex market sessions, their essential characteristics, forex time zones, and how they impact trading.
WHICH ARE THE MOST IMPORTANT FOREX TRADING SESSIONS?
Typically, there are three market sessions in the currency market:
- Asian session (Tokyo)
- European Session (London)
- US Session (New York)
Since big banks, institutions, and retail traders are all operating during these trading sessions, the forex market is functioning and lively. Keeping track of each trading session’s precise start and end timings 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 session begins in Tokyo, and many significant players utilise the trading momentum in Asia to construct their tactics and use them 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 world’s biggest and most significant forex trading session. 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 sessions due to the many participants and transactions.
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 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 most 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).
WHEN IS IT IDEAL TO TRADE?
According to statistics collected over the previous ten years, European currency pairings have performed better when exchanged between 19:00 and 11:00 GMT. Since the US session has little to no impact at this time, as was previously noted, liquidity is relatively low. Due to the lesser liquidity, range-bound trading techniques that better use 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, 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.