Forex trading is a popular venture that allows traders to buy and sell currencies from all over the world. With the forex market being open 24 hours a day, five days a week, traders have the flexibility to choose the best session to trade forex. However, with different time zones and various forex trading sessions, it can be challenging to determine the most suitable time to trade. In this article, we will explore the best forex trading sessions and why they are ideal for traders.
The forex market has four main trading sessions, which are the Asian, European, North American, and Pacific sessions. Each of these sessions has unique characteristics that make them ideal for traders. However, the most popular sessions are the European and North American sessions, which offer the best trading opportunities due to their high volatility and liquidity.
The European session, also known as the London session, is the most active forex trading session. It starts at 8 am GMT and ends at 5 pm GMT. During this session, the European markets are open, including London, Frankfurt, and Paris. The European session accounts for over 40% of the daily forex trading volume, making it the most liquid session. This liquidity provides traders with tight spreads, reducing the cost of trading.
The high liquidity during the European session also offers traders more significant trading opportunities due to the significant price movements. The session overlaps with the Asian session, allowing for more price volatility, which traders can take advantage of to make profits. The European session also coincides with the release of significant economic data such as the European Central Bank (ECB) announcements, which create opportunities for price movements.
The North American session, also known as the New York session, is the second most active forex trading session. It starts at 1 pm GMT and ends at 10 pm GMT. During this session, the North American markets are open, including New York, Toronto, and Chicago. The North American session accounts for over 20% of the daily forex trading volume, making it the second most liquid session.
The North American session is ideal for traders who prefer to trade during the day as it overlaps with the European session. The overlap creates a high level of liquidity, making it an excellent time for traders to enter and exit trades. The North American session is also known for its high volatility, which creates more trading opportunities for traders.
Apart from the European and North American sessions, the Asian session is also a popular trading session, especially for traders who prefer to trade during the night. The Asian session starts at 11 pm GMT and ends at 8 am GMT. During this session, the Asian markets are open, including Tokyo, Hong Kong, and Singapore. The Asian session accounts for over 20% of the daily forex trading volume, making it the third most liquid session.
The Asian session is ideal for traders who prefer to trade during the night as it offers less volatility and fewer trading opportunities. However, the Asian session is suitable for traders who prefer to trade exotic currency pairs such as the USD/JPY and AUD/USD, which have higher liquidity during this session.
The Pacific session is the least active forex trading session and starts at 9 pm GMT and ends at 6 am GMT. During this session, the markets in Australia and New Zealand are open. The Pacific session accounts for less than 10% of the daily forex trading volume, making it the least liquid session. However, the Pacific session is ideal for traders who prefer to trade exotic currency pairs such as the AUD/NZD and NZD/JPY.
In conclusion, the best session to trade forex depends on the trader’s preference and trading strategy. However, the European and North American sessions are the most popular trading sessions due to their high liquidity and volatility. Traders should also consider the economic events and news releases that coincide with the trading sessions to take advantage of price movements. Ultimately, traders should choose a trading session that suits their schedule and trading goals.
