The forex markets are a 24-hour business (Sunday to Friday), but people need to sleep, so how does it stay open 24 hours a day? Well, there are four different trading sessions based on different continents that relate to their timezone. So while London sleeps, Tokyo will be running.
The four trading sessions as the Asian session (which is both Sydney and Tokyo), the London session, and the New York session. Let’s get a little more information about each one.
The Asian Session
The Asian session runs from 22:00 GMT to 08:00 GMT, it is made up of both the Sydney markets and the Tokyo markets.
- The most traded currency during this session is unsurprisingly the Yen which makes up around 16.5% of the transactions during this session.
- Approximately 21% of all forex transactions occur during this trading session.
- The liquidity during this session is often lower than in the other three sessions.
- It is far more likely for a currency pair to range during this market rather than to go on a trending movement.
- Most of the activity will occur at the start of the session as this is when most of the economic news is announced.
- The most movement will be with the JPY, AUD and NZD pairs as the economic news events for these currencies occur during this session.
The London Session
The London session runs from between 08:00 GMT and 16:00 GMT, this has a slight cross over with the New York Session between 13:00 GMT and 16:00 GMT. the Londo session is considered to be the major market session and often attracts the most interest as the key financial center for Europe.
- The session has a huge trading volume with over 32% of all trading transactions occurring during the London session.
- There is a large amount of liquidity.
- This is the session with the most uptrends and downtrends.
- Spreads are often very low during this session.
- The volatility can sometimes slow down in the middle of the London session due to London traders being off for lunch, this remains until the New York Session starts up at 13:00.
- Market trends can sometimes reverse at the end of the session due to European traders locking in their profits.
The New York Session
The New York session runs from 13:00 GMT to 21:00 GMT, this has a slight cross over with the London session between 13:00 GMT and 16:00 GMT.
- There is a rough estimation that about 19% of all forex transactions occur during this session.
- There is a lot of market-moving potential during this session as 85% of all trades involve the US dollar.
- There are high liquidity levels at the start as it overlaps the London session.
- Most of the economic news events are released towards the beginning of this session.
- Liquidity and volatility often decrease as the session goes on.
- There is often little movement on Friday afternoon and a high chance for trend reversals in the second half of the day.
So that is a little overview of the three (four if you could Asia as two) trading sessions that keep the forex trading world running 24/7. The session that you should trade in depends on the pairs that you wish to trade, but we would suggest sticking to ones that don’t keep you up in the middle of the night.