Forex, also known as foreign exchange, is the largest financial market in the world with an average daily turnover of more than $5 trillion. It is a decentralized market where currencies are traded 24 hours a day, five days a week. This means that the forex market is always open, but there are specific times when the market is most active and liquid. These times are known as forex sessions.
There are four major forex sessions – Sydney, Tokyo, London, and New York. Each session has its own unique characteristics, and traders need to be aware of them to maximize their trading opportunities. The first forex session to open is the Sydney session.
The Sydney session opens at 10:00 PM GMT (5:00 PM EST) and closes at 7:00 AM GMT (2:00 AM EST). This session is the least volatile and liquid of all the forex sessions. This is because the major financial centers of the world are not yet open, and most of the trading activity is concentrated in the Asia-Pacific region.
The Sydney session is dominated by the Australian and New Zealand dollars. These currencies are known as commodity currencies because their value is strongly influenced by commodity prices, particularly gold and oil. The Sydney session is also characterized by low spreads, which makes it an ideal time for traders who prefer low volatility and low-risk trading.
The Tokyo session is the second forex session to open. It opens at 12:00 AM GMT (7:00 PM EST) and closes at 9:00 AM GMT (4:00 AM EST). This session is more volatile and liquid than the Sydney session, but it is still relatively quiet compared to the London and New York sessions.
The Tokyo session is dominated by the Japanese yen, which is the third most traded currency in the world after the US dollar and the euro. The yen is known for its safe-haven status, which means that it tends to appreciate during times of economic uncertainty. This makes the Tokyo session an important time for traders who want to hedge their positions against market volatility.
The London session is the most important forex session in terms of trading volume and liquidity. It opens at 8:00 AM GMT (3:00 AM EST) and closes at 5:00 PM GMT (12:00 PM EST). This session is characterized by high volatility and tight spreads, which makes it the most attractive session for day traders and scalpers.
The London session is dominated by the British pound, which is the fourth most traded currency in the world. The euro and the Swiss franc are also important currencies during this session. The London session overlaps with the Tokyo session for a few hours, which creates a period of high liquidity and volatility.
The New York session is the last forex session to open. It opens at 1:00 PM GMT (8:00 AM EST) and closes at 10:00 PM GMT (5:00 PM EST). This session is characterized by high volatility and liquidity, especially during the first few hours of the session when the London session is still open.
The New York session is dominated by the US dollar, which is the most traded currency in the world. The Canadian dollar is also an important currency during this session because of Canada’s close economic ties with the US. The New York session is an important time for traders who want to take advantage of news releases and economic data releases from the US.
In conclusion, the forex market is a 24-hour market, but there are specific times when the market is most active and liquid. The first forex session to open is the Sydney session, which is the least volatile and liquid of all the forex sessions. Traders need to be aware of the characteristics of each forex session to maximize their trading opportunities.
