When and what to trade Think about trading sessions!

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When and what to trade: Think about trading sessions!

Are you asking what and when to trade? The answer may be simpler than it sounds. The answer largely depends on the timing of your trade. So, what indicators to use, what currency pairs and assets to focus on? We have already touched this in our article Trading psychology: how often to trade and how to manage your trades, but repetition is the mother of learning, isn’t it?

Trading sessions

Trading sessions are the fundament. The Forex market is open for 24 hours a day, five days a week. Cryptocurrency market is open for 24 hours a day, each day in the week. Markets in which shares are traded are always open based on the stock exchange’s opening hours. To make it possible the main trading centers in the world open differently depending on the geographical zone (from Europe to Australia and Asia). The most famous financial centers include London, New York, Sydney, and Tokyo.

Timing of trading sessions:

  • London: 9:00–17:00 (CEST)
  • New York: 14:00–22:00 (CEST)
  • Sydney: 23:00–7:00 (CEST)
  • Tokyo: 1:00–9:00 (CEST)

Nothing is fixed. Although you are a European you can participate in trading sessions in Asia or Australia. Logically, the majority of European full-time traders copies the European session. The reason is simple: When do you think the currency pair EUR/USD will be traded most? During the crossing of the European and American sessions or, at least during one of them.

Notice that after 10 pm the trading activity of the above currency pair significantly declines. It’s because Australian and Asian traders are interested in other currencies than EUR and USD. I recommend the website ForexMarketHours to see when each session takes place.

This is how ForexMarketHours looks like

How to use trading sessions

Depending on your favorite or chosen currency pair or another asset you can assess when the pair is likely to be more or less volatile and make use of it in your trading. You can also look to the past session, which may set the direction. Many European traders in the morning before they start their work analyze the Asia trading session. Important indicators (such as Fibonacci) play a major role in it suggesting what might be the reaction during the European trading session.

The second option is the concept of initial balance, usually the first hour of a new session that is supposed to indicate in which direction the market will move. We may draw a parallel with a standard business day. If you know that your day is going to be busy you will get up early in the morning and work quickly. If your day is supposed to be less hectic you are inclined to have a slower start.

Though not being a living thing, market behaves similarly and the first hour may suggest what the next pace might be. More, you may apply Fibonacci lines, or trade for bouncing or breaking the initial balance (high and low in the first hour). These simple facts can be used for building a strong Forex trading strategy. Initial Balance is one of a few indicators than are suitable for the strategy BERSI Scalp.

It is useful to know something about trading sessions and benefit from this knowledge to gain profit. Although not being the Holy Grail, trading sessions can serve as a good helper.

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

Forex Trading Sessions [Best time to trade]

Forex market never closes. There are three major forex trading sessions and each of them starts during different times of the day. For example, when the New York market is going to end, Sydney market opens its day. The presence of different trading sessions influences the market movement. For example, when US and London session overlap, liquidity is a lot higher.

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Asian session

Asian session begins at 12 AM GMT when the market in Tokyo opens. It is important to note that Tokyo is the third largest financial center in the world and Yen is the third most traded currency. About 21% of all Forex transactions happen during the Asian session. A lot of Forex transactions also happen in major financial centers like Hong Kong, Singapore, and Sydney.

The trading week starts with liquidity coming from Wellington, New Zealand. Price movements are less volatile, and average hourly moves are smaller – support and resistance have a tendency to hold more consistently. The currency pairs belonging to Asia Pacific such as AUD/USD and NZD/USD have stronger movements than other non-Asian currency pairs. News releases from Australia, New Zealand and Japan come out during this session.

London session

Liquidity begins to increase in the Forex market around 3 AM ET, as London session opens. The largest portion of liquidity for this session comes from London. Due to the liquidity coming in from London, the average hourly move of major currency pairs like EURUSD is likely to increase. There are fast and active moves in Forex market during the London session. About 30% of all Forex transactions happen during the London session.

Since London session overlaps with the other two sessions, a lot of Forex transactions have happened during this session. The liquidity is very high and transaction costs are very low, resulting in lower pip spreads. Most of the trends begin the London session and they may continue until the start of the US session.

US session

The US trading session is very dynamic. It begins at 8 AM EST. It behaves like London Session when it begins, but behaves similar to the Asian session towards the end. Volatility is high in the morning when it overlaps with the London session.

When the London session begins to close at 11 AM ET, the volatility in the market starts to decline a lot. It is recommended to trade breakouts during the early part of the day and trade ranges during the latter part of the day when the market is less volatile. During Friday afternoon, market movement is very little.

Most of the economic releases are released at the beginning of the US session. Since any major US economic data has a huge impact on the market, it is very important to check the economic news.

Forex – The Market which is open 24 hours a day

Unlike other markets, the Forex market is open 24 hours a day. To Forex traders, this gives a lot of advantages which are not available in the other financial markets. So, no matter where the traders are in the world, they can trade Forex by taking advantage of many things such as global trade opportunities and session overlaps.

Since there are different trading sessions available, traders can pick their trading times according to their schedules. Unlike stock trading, Forex traders can exit a trade anytime to avoid any sudden changes caused by a news release. Trading opportunities are available at all times of the day too. This freedom does not exist in other financial markets.

When two Forex trading session overlaps, there is always a huge volatility. The most volatile Forex market conditions happen when the Sydney and Tokyo equity trading sessions overlap, the Tokyo/London overlaps, and the London/New York overlaps. Forex traders can take advantage of such market overlaps. Every trader should remember that volatility is a very important factor in Forex and make use of the periods when there is maximum volatility.

Three major forex trading sessions

Three important trading sessions that play a major role in the Forex market are the Tokyo Trading Session, the London Trading Session, and the New York Trading Session. As we saw already, the market is very active when the trading sessions overlap. Here is a quick summary and the details of the timings of the trading sessions. All timings are given in the New York time zone.

Best Forex trading sessions

Tokyo Trading Session lasts between 7:00 PM – 4:00 AM EST. Tokyo is the first market to open.

London Trading Session lasts from 3:00 AM EST to 12:00 PM EST. Traders should remember that London is the largest and most important trading center in the world and it is more volatile than the other two sessions.

New York Trading Session occurs between 8:00 am – 5:00 pm EST. This is the second largest trading market in the world, next to London. Needless to say, most of the transactions happen during US/Europe overlap.

Here are the timings for the two major overlap:

  • US/Europe overlap – 8 AM – 12 PM EST
  • Europe/Asia overlap – 2 AM – 5 AM EST

Confused about how to choose a currency pair? Read here.

Forex Trading Sessions

Now that you know what forex is, why you should trade it, and who makes up the forex market, it’s about time you learned when you can trade.

It’s time to learn about the different forex trading sessions.

Yes, it is true that the forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day.

You can make money trading when the market moves up, and you can even make money when the market moves down.

BUT you will have a very difficult time trying to make money when the market doesn’t move at all.

And believe us, there will be times when the market is as still as the victims of Medusa.

This lesson will help determine when the best times of the day are to trade.

Forex Market Hours

Before looking at the best times to trade, we must look at what a 24-hour day in the forex world looks like.

The forex market can be broken up into four major trading sessions: the Sydney session, the Tokyo session, the London session, and Pipcrawler’s favorite time to trade, the New York session. Below are tables of the open and close times for each session:

Spring/Summer in the U.S. (March/April – October/November)

Local Time EDT BST (GMT+1)
Sydney Open – 7:00 AM

Sydney Close – 4:00 PM

Tokyo Open – 9:00 AM

Tokyo Close – 6:00 PM

London Open – 8:00 AM

London Close – 4:00 PM

New York Open – 8:00 AM

New York Close – 5:00 PM

Fall/Winter in the U.S. (October/November – March/April)

Local Time EST GMT
Sydney Open – 7:00 AM

Sydney Close – 4:00 PM

Tokyo Open – 9:00 AM

Tokyo Close – 6:00 PM

London Open – 8:00 AM

London Close – 4:00 PM

New York Open – 8:00 AM

New York Close – 5:00 PM

Actual open and close times are based on local business hours, with most business hours starting somewhere between 7-9 AM local time.

Open and close times will also vary during the months of October/November and March/April as some countries (like the United States, England and Australia) shift to/from daylight savings time (DST).

The day of the month that a country shifts to/from DST also varies, confusing us even more. And Japan doesn’t observe daylight savings, so thank you Japan for keeping it simple.

Now, you’re probably looking at the Sydney Open and wondering why it shifts two hours in the Eastern Timezone.

You’d think that Sydney’s Open would only move one hour when the U.S. adjusts for standard time, but remember that when the U.S. shifts one hour back, Sydney actually moves forward by one hour (seasons are opposite in Australia).

You should always remember this if you ever plan to trade during that time period.

Also take notice that in between each forex trading session, there is a period of time where two sessions are open at the same time.

During the summer, from 3:00-4:00 AM ET, for example, the Tokyo session and London session overlap, and during both summer and winter from 8:00 AM-12:00 PM ET, the London session and the New York session session overlap.

Naturally, these are the busiest times during the trading day because there is more volume when two markets are open at the same time.

This makes sense because, during those times, all the market participants are wheelin’ and dealin’, which means that more money is transferring hands.

Now let’s take a look at the average pip movement of the major currency pairs during each forex trading session.

Pair Tokyo London New York
EUR/USD 76 114 92
GBP/USD 92 127 99
USD/JPY 51 66 59
AUD/USD 77 83 81
NZD/USD 62 72 70
USD/CAD 57 96 96
USD/CHF 67 102 83
EUR/JPY 102 129 107
GBP/JPY 118 151 132
AUD/JPY 98 107 103
EUR/GBP 78 61 47
EUR/CHF 79 109 84

From the table, you will see that the London session normally provides the most movement.

Notice how some currency pairs have much larger pip movements than others.

Let’s take a more in-depth look at each of the sessions, as well as those periods when the sessions overlap.

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