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2023-03-24 23:13

What is a Trading Session? The right time for forex trading

Introduction and review of Trading Sessions and the right time for trading in forex

Now that you know about the forex market, why you should trade in it, and who the forex traders are, it's time to learn about forex trading sessions and when you can trade. The forex market is open 24 hours a day, but that does not mean it is active 24/7!

You can make money trading when the market has ascending and descending movements, but you will have a difficult time making money when the market is not moving at all. This article will help you select the best times of the day and night to trade.

Contents

What is a trading session?

Overlapping trading sessions

The right Trading Time in Forex

What is a trading session?

Time is one of the most important success factors in the forex market and plays a decisive role in the success of people's trades. Therefore, according to the forex market's activity 24 hours a day, from Monday to Friday, this market can be divided into four significant time zones in Sydney(Australia), Tokyo(Asia), London(Europe), and New York(USA), these time divisions are called trading sessions.

Knowledge of trading sessions is significant for carrying out trades and has a unique feature because each session is defined and categorized according to the activities of banks and small and large traders of the continent.

A trader can choose the best time to make a successful trade according to his trading strategy and mood and by examining these factors.

The forex market has had three high-traffic trading sessions from the past till today. Traders often focus on one of these three trading sessions instead of trying to trade 24 hours a day. This technique is known as the "Forex 3-Session Trading System". These sessions include the Asian, European, and North American sessions, also called the Tokyo, London, and New York sessions.

Sydney session (Australia)

According to customs, the International Date Line is where a new calendar day begins. As New Zealand is a big financial center, while forex markets open on Monday morning there, it is still Sunday in most parts of the world. Although Forex trading starts in New Zealand, it is still called the Sydney session.

This session starts at 09 pm UTC and ends at 06 am. The Sydney session has a slow and low fluctuation due to the low liquidity volume. But sometimes, despite the low liquidity volume, fluctuating movements can be seen in some symbols such as gold, etc. If you trade with symbols such as AUDUSD and NZDUSD, one side of which is the Australian dollar or the New Zealand dollar, you should pay attention to the economic data of these two countries that will publish in this session.

Tokyo Session (Asia)

The Tokyo session starts three hours after the Sydney session at 12 am and continues until 09 am. As the Tokyo session starts, the liquidity volume will increase, and the fluctuations will become more and reasonable. Therefore, in a way, the main start of the forex market can be considered the beginning of the Tokyo session activity. You should pay attention to Japan's economic data published in this session if you trade with symbols such as USDJPY, which one side is the Japanese yen. Therefore, symbols with Asian currencies on one side can make profitable fluctuations in this session due to the Asian banks' activity.

London session (Europe)

The activity of the London session starts at 07 am and ends at 04 pm. In the London session, many symbols show good volatility due to high liquidity entering the market. The London session, with a 34.1% turnover of the forex market's daily trading volume , is known as the biggest and most major trading session. Therefore, many traders adjust their trading time in this session due to the logical and suitable movement of this session. It is important to pay attention to the European economic data, especially Germany, for currencies on which one side is the euro, such as EURUSD, and the UK economic data for the pound currency, published in this session.

New York session (USA)

The New York session, as the last trading session, starts at 01 pm and ends at 10 pm. Due to the US economy's high influence in the world, and the dollar's importance in forex trading, almost all currencies fluctuate the most in the New York session. In this session, the market has high volatility, which gives traders a good trading opportunity to earn profit. In the New York session, the most important economic data of the forex market, i.e., the data related to the US dollar, is published, which should be included in the transactions.

The below table shows the working hours of forex trading sessions.

Forex market Summer Time change

Opening and closing times are different in October/November and March/April because some countries (such as the US, UK, and Australia) switch to Daylight Saving Time (DST), and the only session that does not change to DST is Japan. The day of the month on which the official time of different countries changes due to the greater use of Daylight Saving Time also varies. But remember that when the US goes an hour back, Sydney goes forward an hour. (Seasons are reversed in Australia). If you plan to trade during that timeframe, keep this in mind.

It is also important to remember that the forex market's working hours change in March, April, October, and November because the countries' time changes to summer time on different days. Also, the brokers usually inform changes in the forex working hours for any reason.

Overlapping trading sessions

Also note that between forex trading sessions, there is a period when two sessions are open at the same time, which is called overlapping trading sessions. For example, from 08 am to 10 am, the Tokyo and London sessions overlap. And from 01 pm to 05 pm, the London and New York session overlap.

Naturally, these are the busiest times during the trading day, because when two markets are open simultaneously, there is more trading volume, more volatility in symbols, and more profitable trading opportunities. It makes sense because, during those times, all traders in the market are trading, which means more money is moving.

A trader can choose the best time to make a successful trade according to his trading strategy and mood and by examining these factors.

The table below shows the average movement of currency pairs based on pips in forex trading sessions.

As you can see in the table, the London and New York session usually provide the most movement, so the overlap of these two sessions can create good trading opportunities for traders whose strategy is suitable for high volatility.

The right Trading Time in Forex

The right trading time is relative and depends on the individual's mood and trading strategy, it also depends on what currency pairs or symbols the trader trades.

People whose strategy is suitable for high volatility and who trade currencies such as dollars, euros, pounds, and francs can trade in London and New York sessions. Also, these people can trade during the release of important economic news because the related symbols perform high fluctuations.

In some trading times, the symbols' movements are slower. At the end of the New York trading session, when the daily trading ends, and the beginning of the Sydney session, when the daily trading begins, slow fluctuations are noticeable due to the decrease in trading volume.

The forex market symbols and their exact working hours are mentioned in the Forex financial markets article.

Usually, when the Sydney session starts from 09 pm until 06 am, the fluctuations are low due to the low liquidity volume, and they increase when the Tokyo session starts at 12 am. The market takes a fresh breath with the Europeans' arrival at 07 am, and the fluctuations' intensity increases from 01 pm to 04 pm, with the largest market participants, that is, the Americans coming in, most symbols' volatilities reach their peak.