What are Forex Sessions?

In Forex, time is money, literally. The forex market is open 24 hours a day during weekdays, but this does not necessarily mean you should trade forex assets at any time, or all day. Volatility varies during different times of the day because of different forex trading sessions. It is important to understand the different forex trading sessions to establish the best times to trade and the best forex assets to trade.

There are generally four main trading sessions: the Sydney session, the Tokyo session, the London Session, and the New York session. Both the Sydney and Tokyo sessions are customarily referred to as Asian sessions. This is why Forex is usually called the 3-session market: Asia, London, and New York.

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Here are the different characteristics of different trading sessions:

North American Session – New York

The New York session opens at 1300hrs GMT, while the London session is still running. The New Session closes at 2100hrs GMT. The New York session also features high activity, especially during the early hours when it overlaps with the open London session. Most movements are driven by the US dollar, which is the most traded currency as well as the most influential in the Forex markets. Additionally, most news and events that impact the US dollar are typically released in the early hours of the New York open. There is high liquidity and volatility in the early hours during the London/New York overlap (1300hrs GMT – 1600hrs GMT), and most assets feature thin spreads. However, volatility and liquidity tend to decrease during the latter half of the New York session. The USD is the cue provider during the New York session, and traders can trade all the major pairs such as EURUSD, GBPUSD, USDCHF, USDJPY, USDCAD, AUDUSD, and NZDUSD. The US Federal Reserve is the central bank to watch, as well as major US data such as Nonfarm Payrolls, Trade Balance, GDP, Industrial Production, and Retail Sales.

Asian Session – Australia

The Asian session starts with the Sydney market opening at 2200hrs GMT. Although it is referred to as the Sydney Open, it is actually the time when the New Zealand financial markets open. The Asian session runs up to the Tokyo close at 0800hrs GMT. The Asian session is usually characterized by thin liquidity, with most pairs generally trading within a range. The low liquidity also means that currency pairs are generally traded with relatively wider spreads. Most activity during the Asian session happens during the early hours when relevant economic news releases are scheduled. The best currencies to trade during the Asian session include the Japanese yen, Australian dollar, and New Zealand dollar. Forex traders should also watch out for news releases from central banks and statistics agencies in Australia, New Zealand, and Japan.

European Session – London

The London session opens at 0800hrs GMT, just as the Tokyo session closes. This is the biggest forex trading session, accounting for over 32% of all activity. London is a major global financial hub and is used as the reference for all major European financial centers. The London session closes at 1600hrs GMT. The London session is characterized by massive liquidity and high volatility. Many currency pairs make their biggest price moves during the London session. Most price advances and reversals happen during this session. The high liquidity also means that most currency pairs are traded with relatively thin spreads. The euro and pound sterling pairs are the best currencies to trade during the London session. Traders should also watch out for news from the European Central Bank and Bank of England, as well as important economic indicators from statistics agencies of the EU and countries such as Germany, the UK, France, and Italy.

When is the Best Time to Trade?

The best time to trade will depend on you – the trader. Your availability, your time zone, or your trading style. For instance, if you want to target just a few pips in a low volatile environment, the Asian trading session will suit your well. But if you want high volatility and big price movements, it is best to trade during the London session or the early hours of the New York session.

Your time zone and availability will also determine the best assets for you to trade. For instance, if you are available to trade from 0800hrs GMT to 1200hrs GMT (during the London session), you are better off trading EUR and GBP pairs.

If there is no restriction though, the general consensus is that the best time to trade is when the different trading sessions overlap. These times are when market participants from different financial centers of the world are active. There is sufficient volatility and different assets can be traded with high liquidity and low spreads. The best overlap is the London/New York active hours (1300hrs GMT – 1600hrs GMT).

If you want to learn more, continue our guide on Trading Forex.

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**Important

Countries such as the US, UK, and Australia observe Daylight Savings Time (DST). This will also influence the opening and closing times of the respective trading sessions. While Friedberg Direct powered by AvaTrade technology notifies traders of changes in different open/closing times, it is important to note that due to DST, there will be changes in market hours in March, April, October, and November.