Forex trading is the largest financial market in the world, with over $6.6 trillion traded daily. Forex traders trade currencies in pairs, with the aim of profiting from the fluctuation in exchange rates. As the forex market is open 24 hours a day, five days a week, traders need to know which pairs to trade during each session to maximize their profits.
Forex trading sessions
There are four main forex trading sessions: Sydney, Tokyo, London, and New York. Each session has its unique characteristics, and different currency pairs are more active during different sessions.
1. Sydney session
The Sydney session opens at 10 pm GMT and closes at 7 am GMT. This session is relatively quiet as most of the major financial centers are closed. The currency pairs that are more active during this session are the AUD/USD, NZD/USD, and the AUD/JPY.
The AUD/USD pair is popular with traders during the Sydney session as it is the currency pair that involves the Australian dollar, which is the base currency. The AUD/JPY is also popular during this session as it involves the Japanese yen, which is often used as a funding currency for carry trades.
2. Tokyo session
The Tokyo session starts at 12 am GMT and closes at 9 am GMT. This session is known for its volatility, as the Japanese yen is involved in most of the major currency pairs. The currency pairs that are more active during this session are the USD/JPY, EUR/JPY, and the GBP/JPY.
The USD/JPY is the most popular currency pair during the Tokyo session as it involves the US dollar, which is the world’s most traded currency. The EUR/JPY and GBP/JPY are also popular during this session as they involve the euro and the pound sterling, which are both major currencies.
3. London session
The London session starts at 8 am GMT and closes at 5 pm GMT. This session is the most active and liquid as it overlaps with both the Tokyo and New York sessions. The currency pairs that are more active during this session are the EUR/USD, GBP/USD, and the USD/CHF.
The EUR/USD is the most popular currency pair during the London session as it involves the euro, which is the second most traded currency in the world. The GBP/USD is also popular during this session as it involves the pound sterling, which is the fourth most traded currency in the world. The USD/CHF is popular during this session as it involves the Swiss franc, which is often used as a safe-haven currency.
4. New York session
The New York session starts at 1 pm GMT and closes at 10 pm GMT. This session is known for its volatility, as it overlaps with the London session for four hours. The currency pairs that are more active during this session are the USD/CAD, USD/JPY, and the EUR/USD.
The USD/CAD is the most popular currency pair during the New York session as it involves the Canadian dollar, which is closely tied to the US economy. The USD/JPY is also popular during this session as it involves the Japanese yen, which is often used as a funding currency for carry trades. The EUR/USD is popular during this session as it involves the euro, which is the second most traded currency in the world.
Conclusion
In conclusion, forex traders need to know which currency pairs to trade during each session to maximize their profits. During the Sydney session, traders should focus on the AUD/USD, NZD/USD, and the AUD/JPY. During the Tokyo session, traders should focus on the USD/JPY, EUR/JPY, and the GBP/JPY. During the London session, traders should focus on the EUR/USD, GBP/USD, and the USD/CHF. During the New York session, traders should focus on the USD/CAD, USD/JPY, and the EUR/USD. By understanding which currency pairs are more active during each session, traders can make informed trading decisions and increase their chances of success.
