Forex or foreign exchange market is open 24 hours a day, five days a week, which means that trading is possible at any time during this period. However, not all trading sessions are created equal, and traders need to understand what forex session they are in to make informed trading decisions. In this article, we will explain the different forex sessions and the factors that influence them.
Forex Market Sessions
The forex market is divided into four major trading sessions, which are based on the time zones of major financial centers. These are:
1. Sydney Session (Asian Session)
2. Tokyo Session (Asian Session)
3. London Session (European Session)
4. New York Session (American Session)
Each of these sessions has its own unique characteristics and trading patterns, which are influenced by the economic and political events of the regions they represent.
Sydney Session (Asian Session)
The Sydney session is the first trading session of the day and starts at 10:00 PM GMT and ends at 7:00 AM GMT. It is also known as the Asian session, as it includes the financial centers of Tokyo, Hong Kong, Singapore, and Sydney.
The Sydney session is usually quiet and has low volatility, as the major financial centers in the region are not fully operational during this period. However, traders should keep an eye on economic releases from Australia and Japan, as they can affect the value of their respective currencies.
Tokyo Session (Asian Session)
The Tokyo session is the second trading session of the day and starts at 12:00 AM GMT and ends at 9:00 AM GMT. It is also part of the Asian session and overlaps with the Sydney session for two hours.
The Tokyo session is known for its volatility, as it includes the financial center of Tokyo, which is the third-largest forex trading center in the world. Traders should pay attention to economic releases from Japan, as they can have a significant impact on the value of the yen and other currencies in the region.
London Session (European Session)
The London session is the third trading session of the day and starts at 8:00 AM GMT and ends at 5:00 PM GMT. It is also known as the European session, as it includes the financial centers of London, Frankfurt, Paris, and Zurich.
The London session is the most active and volatile trading session, as it overlaps with both the Asian and New York sessions. Traders should pay attention to economic releases from Europe, as they can have a significant impact on the value of the euro and other currencies in the region.
New York Session (American Session)
The New York session is the fourth and final trading session of the day and starts at 1:00 PM GMT and ends at 10:00 PM GMT. It is also known as the American session, as it includes the financial centers of New York, Chicago, and Toronto.
The New York session is the second most active and volatile trading session, as it overlaps with both the London and Tokyo sessions. Traders should pay attention to economic releases from the United States, as they can have a significant impact on the value of the dollar and other currencies in the region.
Factors That Influence Forex Sessions
The forex sessions are influenced by various factors, including economic releases, political events, and market sentiment. Here are some of the factors that traders should keep in mind when trading during different forex sessions:
1. Economic Releases: Economic releases such as GDP, inflation, and employment data can have a significant impact on the value of currencies. Traders should pay attention to economic releases from the regions they are trading in to make informed trading decisions.
2. Political Events: Political events such as elections, wars, and trade disputes can also affect the value of currencies. Traders should keep an eye on the political events in the regions they are trading in to avoid surprises.
3. Market Sentiment: Market sentiment refers to the overall mood of traders towards a currency. Traders should pay attention to market sentiment when trading during different forex sessions, as it can affect the volatility of currencies.
Conclusion
In conclusion, understanding what forex session we are in is crucial for making informed trading decisions. Traders should be aware of the different forex sessions and the factors that influence them, including economic releases, political events, and market sentiment. By keeping these factors in mind, traders can make informed trading decisions and maximize their profits in the forex market.
