How Do Forex Market Sessions Work?

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How Do Forex Market Sessions Work?
How Do Forex Market Sessions Work?

Tiếng Việt

As shared in the previous article, the Forex trading market will be active 24 hours a day. However, the market’s amplitude is not the same for every session of the day. 

There are times when the market will move in extremely large amplitudes (increase or decrease a lot). However, there are times when the market almost moves “sleepily”. 

So why?

To understand the reasons as well as be able to choose the appropriate trading time, we will learn through today’s article.

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Market time frames

The Forex market operates 24 hours a day and is divided into different trading sessions. In which, there are 4 main sessions including Sydney, Tokyo, London, and New York. The opening and closing hours of these sessions differ between winter and summer. Below is a detailed picture.

Summer:

REGIONEST
Opening time of the Sydney session

Closing time of the Sydney session

8:00 PM

12:00 AM

Opening time of the Tokyo session

Closing time of the Tokyo session

7:00 PM

4:00 AM

Opening time of the London session

Closing time of the London session

2:00 AM

11:00 AM

Opening time of the New York session

Closing time of the New York session

7:00 AM

4:00 PM

Winter:

REGIONEST
Opening time of the Sydney session

Closing time of the Sydney session

7:00 PM

11:00 AM

Opening time of the Tokyo session

Closing time of the Tokyo session

7:00 PM

4:00 AM

Opening time of the London session

Closing time of the London session

3:00 AM

12:00 AM

Opening time of the New York session

Closing time of the New York session

8:00 AM

5:00 PM

The excitement in every session

Asian session

The Tokyo session is sometimes referred to as the Asian session because of the highest number of transactions usually performed here. However, the transaction volume is still quite small. 

Japan is the third-largest foreign exchange market in the world. Therefore, it is not surprising that the Yen is the 3rd most traded currency.

Some characteristics that you should know about the Tokyo session:

+ Liquidity is sometimes very poor. Trading in this session, sometimes you have to wait a long time before getting results.

+ Usually, you will see strong movements within Asian currency pairs such as AUD/USD, NZD/USD, or USD/JPY.

+ Most trading happens at the beginning of the session when the economic news is released.

Market time frames
Market time frames

London session

London is the largest and most important trading center in the world. Most of the major commercial banks are located in London. The reason is for the high liquidity and efficiency of the market. The large number of investors participating and the large volume of transactions make the London session the most volatile one among all trading sessions.

Some characteristics to know about the London session:

+ High liquidity and lower transaction fees, e.g lower spreads.

Most price trends start in the London session. They will last until the start of the New York session.

+ Because of the large volume of transactions and high liquidity during the European session, we can trade most currency pairs. However, it is best to trade the main pairs (EUR/USD, GBP/USD, USD/JPY, USD/CHF) whose spreads are usually the lowest.

The excitement in every session
The excitement in every session

New York session

New York is the second-largest market, accounting for more than 19% of the total Forex market revenue.

Some information to know about the New York session:

+ The time that coincides with the European session is when the market is active and with high liquidity.

+ Most economic reports are released during the opening of the New York session. Please note that 85% of transactions involve the USD. Therefore, whenever economic news is released during the New York session, the market is capable of strong volatility.

The amplitude of fluctuations of major currency pairs in each trading session

Amplitude of fluctuations of currency pairs
Amplitude of fluctuations of currency pairs

We can see that the market moves most strongly during the London session.

Overlapping of sessions

A good liquid Forex market means more and more people enter the market. 

Therefore, the time when the sessions overlap is when the liquidity is highest.

Let’s learn about the overlap of sessions.

Joint session of Tokyo and London

Liquidity will usually be quite poor during this period. It is for a number of reasons as follows:

+ Normally, there are not many fluctuations in the Asian session. Therefore, when entering the end of the session, there is almost no change.

+ For European traders, this is just the start of the day. Therefore, they limit transactions when the market lacks liquidity.

This creates an ideal period for you to relax while waiting for trading opportunities in the joint session of London and New York.

Overlapping of the Tokyo and London sessions
Overlapping of the Tokyo and London sessions

Joint session of London and New York

The “fun party” has just started now. This is the busiest time when transactions are executed constantly. The market will move within an extremely large amplitude. It is especially when news, financial reports, etc. from the US and Canada are released. The market may also be affected by “late” news from Europe. 

Most trends begin during the European session and will continue until the end of the New York session. However, it is still possible that the trend will reverse at the end of the European session when traders decide to take profits.

Overlapping of the London and New York sessions
Overlapping of the London and New York sessions

In one word

The Forex market operates continuously 24/5. However, you can’t sit in front of a computer screen all day. Hopefully, this article will help you choose the right time for your trading strategy.

You should join Forex as an investor, not a gambler. Make yourself the wisest trader. I wish you successful transactions.

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