Forex, also known as the foreign exchange market, is the largest financial market in the world. It involves the buying and selling of currencies from around the globe. As such, it is important to understand the different trading sessions that occur in the forex market.
The forex market is open 24 hours a day, five days a week. However, this does not mean that all trading sessions are equal. In fact, there are three main trading sessions in forex: the Asian session, the European session, and the North American session.
The Asian Session
The Asian session, also known as the Tokyo session, is the first major trading session of the day. It begins at 00:00 GMT and ends at 09:00 GMT. This session is dominated by Japan, China, and Australia, and it accounts for approximately 21% of the total forex trading volume.
During this session, the Japanese Yen is the most actively traded currency. This is because Japan is a major exporter of goods and services, and many international companies do business with Japanese firms. Traders also keep an eye on economic data releases from Australia and China, as these can have an impact on the market.
The European Session
The European session, also known as the London session, is the second major trading session of the day. It begins at 08:00 GMT and ends at 17:00 GMT. This session is dominated by the United Kingdom, Germany, and France, and it accounts for approximately 38% of the total forex trading volume.
During this session, the Euro is the most actively traded currency. This is because the Eurozone is one of the largest economic regions in the world, and many international companies do business with European firms. Traders also keep an eye on economic data releases from the United Kingdom, as this can have an impact on the market.
The North American Session
The North American session, also known as the New York session, is the third major trading session of the day. It begins at 13:00 GMT and ends at 22:00 GMT. This session is dominated by the United States and Canada, and it accounts for approximately 28% of the total forex trading volume.
During this session, the US Dollar is the most actively traded currency. This is because the United States is the largest economy in the world, and many international companies do business with US firms. Traders also keep an eye on economic data releases from Canada, as this can have an impact on the market.
Overlap Sessions
There are also two overlap sessions in forex. The first overlap session occurs between the Asian and European sessions, and the second overlap session occurs between the European and North American sessions. These overlap sessions occur between 08:00 GMT and 17:00 GMT, and they account for approximately 26% of the total forex trading volume.
During these overlap sessions, there is increased trading activity, as traders from different regions are active at the same time. This can lead to increased volatility in the market, as well as increased opportunities for traders to profit.
Conclusion
In conclusion, understanding the different trading sessions in forex is important for traders who want to maximize their profits. Each trading session has its own characteristics, and traders need to be aware of these characteristics in order to make informed trading decisions. By understanding the different trading sessions in forex, traders can develop effective trading strategies that take advantage of the opportunities presented by each session.
