As a Forex trader, you should know what are the times of the forex sessions and when the forex market opens and closes and when you can trade currencies without being exposed to risk. Therefore, in this article, we will tackle the ins and outs of trading sessions and the best hours to strike your deal.
Why should I Care about the Sessions?
The Forex market is the most comprehensive fiscal market on earth as its daily trading volume reaches up to three trillion dollars. It opens five days per week, 24 hours per day. So, there are hours that are more profitable than the others during this 24-hour cycle, and it is the trader’s proficiency to detect these hours to earn more profits. As we know, this huge market is composed of a wide array of banks, independent brokers, and investment-management corporates, operating to send local clients exchange requests. However, this doesn’t mean that the market remains active throughout the entire day. That is why traders wait for trading sessions, which are the peak trading times.
What are the Important Sessions that I should Know About?
The peak hours are divided into three sessions:
- The Asian session: This session takes place in Tokyo and is deemed the primary session to witness forex moves. Represented by Tokyo Financial Market, this session occurs at the beginning of the week at the peak of liquidity. Several countries, such as China, Russia, New Zealand, and Australia witness significant moves. Given the importance of this session, Forex experts recommend novices to remain active during it, namely at its start and end. The session extends beyond the standard Tokyo hours, usually happens between 11 pm and 8 am GMT.
- European session: The session takes place in London and aims at sustaining the volatility of the forex market before the Asian trading hours come to an end. Although the session encompasses other capital markets, including Germany and France before the official opening in the UK, London was chosen to be the host of this major session because it emerged as the top-European capital that established the parameters of the European session. The session is held during the official working hours of London – from 7:30 am to 3:30 pm. Additionally, hours have been extended to suit Greenwich Time. The end of the session is usually delayed as trading remains active even after the session comes to an end.
- North America session: This session is held in the U.S capital, New York after the end of the Asian session. It starts at noon according to GMT and has a remarkable value due to the presence of major countries, such as Canada, Mexico, and South America. This results in a high level of volatility as shown by the economic data. The New York Stock Exchange closes at 8 pm, synchronizing with the closing time of the North American session.
What is the Forex Market Time Converter? And how can I use it?
Since the market remains open throughout the 24-hour cycle, it is important to take notice of the opening and closure of the global market centers. One of the most effective means to do so is the Forex Market Time Converter as it tells you in the Status column whether the center is open or closed. This helps you detect the times of activity in which most centers are trading. It is advisable to make your trading activity during the Asian, North American, and European sessions and to make the Time Converter remind you of their opening times.
What are the Most Important Currency Pairs in the Asian Session?
If you are a newbie trader, it is recommended to concentrate on currencies, such as AUD, NZD, and JPY as they are the most prevalent currencies in the sessions. Japanese companies enter into a wide range of deals with the Yen, which makes it one of the top currencies that you should consider. Moreover, since Australia and Japan rely on Chinese demand, the AUD and JPY achieve significant value. The Asia-Pacific pairs, such as AUDUSD and NZDUSD are among the session’s top active currencies.
What are the Most Profitable Hours in Forex?
The answer to this question will vary from one trader to another because the best hours are dependable on the disciplines and style of traders as well as the currencies they use. If you seek amplified volatility, you need to choose close currency pairs when overlaps take place. Besides, experts refer to build-up times as peak times as they occur after key decisions, such as interest rate and GDP. Regarding the worst times, they usually occur between the end of the New York session and the beginning of the Sydney session. These gabs are usually marked by low activity. Besides, the ends and beginnings of new weeks don’t seem to have a high level of volatility since most traders have their holidays during these times.
The Overlaps of Sessions
The overlap of the Asia and Europe sessions
The first overlap period is in the morning between 6 a.m. and 10 a.m. in Europe, during which the European and Asian markets are open. During this phase, the volumes treated are particularly important until 8 am. It is also time for the publication of the economic data of the day in Europe. One of the primary currency pairs to be traded preferably during this time slot is the GBP / JPY as both currencies are active at the same time.
The overlap of the opening of the Europe and America sessions
The second overlap period corresponds to the simultaneous opening of the European and American markets, between 10 a.m. and approximately 6 p.m. European time. This time slot is the most important with a trading peak of the dominant currency pair of the Forex market: USD / EUR. During this phase, the best time for trading is between 2 p.m. and 4 p.m, during which the New York market is in full swing. Around 2:30 p.m., most economic news in the United States is released, including data on economic growth, employment, and inflation. The best currency pairs for this time are EUR / USD, GBP / USD, USD / CHF which show significant variations.
This article attempted at highlighting the importance of Forex sessions to help traders know the best times for trading.