Forex trading is the exchange of currencies between two parties at an agreed price. The forex market operates 24 hours a day, five days a week, from Monday to Friday. However, this does not mean that the forex market is open all the time. Forex trading hours are divided into three main sessions: the Asian session, the European session, and the American session. Each session has its unique characteristics, and traders should be aware of them to make informed investment decisions.
Asian Session
The Asian session is the first session of the forex market and begins at 00:00 GMT and ends at 09:00 GMT. This session is also known as the Tokyo session because it is dominated by the Japanese market. Other major markets that are active during this session include Australia, New Zealand, and China. The Asian session is characterized by low volatility and low trading volume since most of the European and American traders are not active at this time.
European Session
The European session is the second session of the forex market and begins at 07:00 GMT and ends at 16:00 GMT. This session is also known as the London session because it is dominated by the UK market. Other major markets that are active during this session include Germany, France, and Switzerland. The European session is characterized by high volatility and high trading volume since most of the European traders are active at this time.
American Session
The American session is the third session of the forex market and begins at 12:00 GMT and ends at 21:00 GMT. This session is also known as the New York session because it is dominated by the US market. Other major markets that are active during this session include Canada and Mexico. The American session is characterized by high volatility and high trading volume since most of the American traders are active at this time.
Overlap Sessions
Overlap sessions occur when two sessions are active simultaneously. During these times, the forex market experiences the highest trading volume and volatility. The overlap sessions are:
– Asian/European Overlap: This overlap occurs between 07:00 GMT and 09:00 GMT when the Asian and European sessions are active simultaneously. During this time, the forex market experiences high trading volume and volatility.
– European/American Overlap: This overlap occurs between 12:00 GMT and 16:00 GMT when the European and American sessions are active simultaneously. During this time, the forex market experiences the highest trading volume and volatility.
– Asian/American Overlap: This overlap occurs between 00:00 GMT and 04:00 GMT when the Asian and American sessions are active simultaneously. During this time, the forex market experiences moderate trading volume and volatility.
Conclusion
In conclusion, the forex market is open 24 hours a day, five days a week, from Monday to Friday. The forex trading hours are divided into three main sessions: the Asian session, the European session, and the American session. Each session has its unique characteristics, and traders should be aware of them to make informed investment decisions. The overlap sessions occur when two sessions are active simultaneously, and they are characterized by the highest trading volume and volatility.
