In today’s article we will have a closer look at the different trading sessions in Forex, and how to best choose your timings based on that information.
As you already know, the Forex market is open 24 hours a day, from Monday to Friday. However, the trading volume can be vastly different between certain periods of time. This is related to different time of day in some of the major trading centers. There are four distinct trading sessions:
The Pacific Session
The trading week begins at 23:00 EET on Sunday when the stock exchange in Wellington, New Zealand opens up. However, the trading volume a this time is extremely low, therefore it is considered that the actual start of the Pacific session is at midnight on Monday, when the Sydney exchange opens up.
At 3:00 EET Tokyo wakes up, and an hour later Hong Kong and Singapore follow suite, along with most of the market action. The open at Tokyo is considered the official start of the Asian session, as this is the time when 21% of all trades is executed.
Specifics of the Asian Session:
- The most active pairs during this time are those that contain JPY, AUD, and NZD.
- Liquidity is usually low at this time, most of the pairs are only forming support and resistance for future movement.
- Since most of the traders begin their day during this session, it can set the tone for the rest of the trading day.
With the onset of the European trading session, the trade volume begins to increase exponentially. The main business center of Europe, London, is considered to be the financial capital of the world. Although, trading in London opens one hour later than in the rest of the exchanges in this region, it attracts most of the attention in the trading community – at 9:00 EET.
Specifics of the European Session:
- Most currency pairs feature considerable volatility during this time. Worth mentioning are the Yen crosspairs such as EUR/JPY and GBP/JPY.
- The majority of trades are made during the worktime of European stock exchanges.
- Most of the stronger trends begin at this time.
Lunchtime in Europe corresponds with the opening of the American trading session – the trading floor opens up in New York.
Specifics of the American Session:
- Any currency pairs may be traded, without concern for low volatility – all of the currency pairs are active during the American session, especially during it’s beginning.
- The beginning of the session features very high liquidity, due to overlap between some of the most active trading session: Europe and America.
- On Fridays, the American session is much less active, due to Asian and European traders leaving for the weekend.
When Should I Trade?
This depends on what trading style you’ve chosen for yourself. If you tend to trade on daily, weekly, or event monthly charts, you may simply disregard the timing f these sessions. However, if you like intraday trading, the best time to do it is starting at the beginning of the European Session, and up to mid-American session, as this is the time when most market movement is observed.
For dessert, there’s a quick cheat the we would highly recommend to our readers: Try googling up a sessions indicator for your MT4. There are a couple such indicators that are available for free, and would much simplify your life if you have trouble remembering the starting and closing times of the different trading sessions.