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Top Forex Trading Sessions

Major Forex Trading Sessions and The Best Times to Trade Forex

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Forex market is a global market and is open 24 hours a day except for weekends. Traders from various regions participate in the forex market according to their time zones. The forex market is divided into four forex trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. However, some traders divide the forex market into three sessions: the Asian session (Tokyo session), the European session (London session), and the North American session (New York session).

4 Major Forex Trading Sessions Worldwide

Trading sessions

Forex trading is not driven by a single exchange but by a global network of currency exchanges and brokers. Each participating country adheres to its own set of trading sessions on the foreign exchange market. As a forex trader, it is essential to learn about the different forex trading sessions to execute your trading strategies accordingly. In this article, we will discuss the salient features of each trading session, which will help you determine which session is the best for you.

1. The Sydney Trading Session

The Sydney session is the first session to open and begins at 10 PM GMT in summer and 9 PM GMT in winter. The session closes at 7 AM GMT in summer and 6 AM GMT in winter. The volatility and liquidity generally remain low in the Sydney session and gradually grow in other subsequent sessions. Traders generally avoid sessions with low liquidity and volatility as it provides low trading opportunities.

You should consider trading the Australian and New Zealand dollars during the Sydney session.

2. The Asian / Tokyo Trading Session

The Asian or Tokyo trading session starts at 12 AM GMT in summer and winter and closes at 9 AM GMT in summer and winter. The forex market picks momentum in the Asian session, and many traders use the Asian trading session to gauge the future trend of the forex market. The Asian session accounts for roughly 6% of the total forex transactions.

The Asian or Tokyo session is known for low liquidity and volatility, which makes it easier for traders to determine their entry and exit points. Traders can employ risk management strategies with ease as traders can quickly react to adverse market moves and change their strategies accordingly. Traders can exploit breakout opportunities during the overlap with the start of the London or European session. During the time of overlap, liquidity and volatility start increasing resulting in breakouts.

You should consider trading the crosses of the Japanese yen, Australian dollar, Singapore dollar, and New Zealand dollar during the Asian session as these currency pairs are most actively traded during the session.

3. The European / London Trading Session

London, the economic centre of the world, accounts for more than 35% of the total trading volume. Other important cities in Europe involved in the European session include Frankfurt, Milan, and Amsterdam. The European trading sessions are best known for high liquidity because big financial institutions and banks deal in the forex market from London and run their forex operations during the European session.

You can enjoy high liquidity, volatility, and low spreads during the European session. At the end of the London or European session, trends can sometimes reverse as European traders lock in some of their gains. Due to the high liquidity and volatility, you can trade almost any currency pair, but the most traded pairs during the session include EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY, and GBP/JPY. Due to high volatility, you need to be careful with your risk management strategies while executing trades as sudden market moves can disturb your account.

4. The US / Newyork Trading Session

New York, the central city in the US trading sessions, accounts for roughly 15% of the daily total forex transactions across the world. During the overlap of the European and the U.S sessions, volatility and liquidity remain high. However, as the European session ends, the momentum of transactions decreases. Other financial centres, such as Toronto and Chicago also contribute to trading during the U.S trading session.

Because the U.S dollar is involved in roughly 85% of all forex trades, the U.S session is extremely important as most of the moves in the U.S dollar occur during the U.S trading session. Major economic reports and data are released during the U.S session which often begets major moves in the U.S dollar. On Friday, you can see the reversal of trends as most U.S traders close their positions in the second half of the U.S session to protect themselves from the overnight significant news events.

To become a successful forex trader, you should know the opening and ending times of each of the four trading sessions. Some traders based in Asia like to trade in the U.S trading sessions to capture the major moves in the U.S dollar while some traders based in the U.S prefer European sessions. Each session has its own advantages and disadvantages and you should determine what trading session to trade based on your trading style and trading strategies.

When is the Best time to trade Forex?

Trading in the forex market would be most successful if you were to do so during the most active periods of the market. This is the time when trading spreads (the difference between bids and asks) tend to narrow. This results in less money going to market makers who facilitate currency trades, consequently leaving more money for traders themselves.

There will be more trading activity when more than one of the four markets is open at the same time, resulting in greater currency fluctuations. There will always be the highest volume of trading and the best trading opportunities in the overlap between the U.S. and London trading sessions (8 a.m. to noon EST). Despite being less volatile than the overlap between the U.S. and London markets (2 a.m. to 4 a.m.), the overlap between Sydney and Tokyo trading sessions presents excellent opportunities.

The key to successful Forex trading is to trade when the price movement is most volatile. The following are times when price activity is at its peak:  

  • The overlap of trading sessions 
  • News releases and publication of financial data 
  • Actions by the key players in the market (i.e., Central Banks

Hence it is a must for Forex traders to develop a proper understanding of forex market hours and adjust their trading strategies accordingly if they want to hit the jackpot. Furthermore, keeping an eye on the economic calendar will help you stay informed of all important market activities.

Overlaps in the Forex Sessions

When preparing to open a forex account, traders should be familiar with their trading sessions and pay attention to times when two exchanges overlap, as certain times of the day are more active.

The overlaps are the busiest trading sessions of the day when it comes to Forex trading, as the market is very active during these times. Trading during these times of day is particularly profitable due to its higher volatility and liquidity. At any given time, currency pairs show varying levels of activity, depending on who is active in the market. Understanding the different Forex trading sessions is essential to identifying when forex pairs are most active.


The Worst Times to Trade Forex

The best and worst times of the day for Forex trading are solely determined by your preferred trading strategy, style, and the currency pairs you prefer to trade-in. However, there are some instances that you need to be aware of in order to protect your capital.

1. Avoid trading before or after major news releases.

The advantage of trading before the news release is that traders can enter the market efficiently, while the market is less volatile, to their advantage. However, markets may experience significant volatility before the release of important news, depending on the importance of the news. Although volatility can make us money, trying to trade an event whose outcome and market response cannot be predicted is risky.

There will be a dramatic increase in spread and slippage when the USA release Non-Farm Payroll and FOMC reports and other currencies release Consumer Price Index and Bank Rates. It is recommended that inexperienced traders stay on the sidelines or set up a CENT account to get used to the increased volatility. Putting hard-earned capital at risk is not a good idea.

Traders must understand that just because the market is moving, they do not have to trade it. Most of the volatility you see every single day is actually just a trap waiting to catch traders unprepared. It is common for traders to mistake luck for a developed skill if the trade moves in their favour. In these situations, newer traders often set themselves up for huge losses without even realizing it. You may find a handful of winners purely by luck, but the likelihood of continuing success for them is almost zero.

2. The First and Last Day of the trading Week.

Usually, the first 24 hours of a new trading week are relatively slow. As market participants return from their 48-hour hiatus, they are just getting back online. During this time, the markets are also determining which direction they will take for the coming week. This is why you should stay off the market each Monday – unless you already have a position established from previous weeks.

Fridays are the opposite end of the spectrum. During the final 24 hours of the trading week, liquidity tends to be lower. It is well known that technical analysis works best in markets that are highly liquid. Moreover, you prefer not to take on new risks before the weekend. There are times when the Forex market may gap quite aggressively on Monday, which you don’t want to be on the wrong side of.

Most traders agree that Friday is the most problematic day of the two. In front of a 48-hour window where you can’t do anything but just watch, starting a new position doesn’t feel right. This is why most people open new positions between Tuesday and Thursday since they find that these are the best days to open new positions. The market has settled into its weekly routine by this time. You can also cut your losses if the market moves against you since it’s far enough away from the weekend.


Role of Technical Analysis in Timing Forex Trades

Technical analysis is a very essential part of successful Forex trading as it helps identify the overall price trend, optimal entry and exit points, as well as support and resistance levels. A technical analyst analyzes past market data, such as prices, volumes, and trends, using which they can predict future price movements with greater accuracy during different trading sessions.

A technical analysis indicator can provide you with various kinds of information. The use of several indicators, such as price-based indicators, volume-based indicators, moving averages, and trend lines, will help you make informed decisions since often history often repeats itself.

 How to learn Forex Technical Analysis?

Several resources can be found online to teach you the basics of technical analysis while you learn Forex trading. You can speed up the process by taking online courses and contacting professional traders. By doing so, you can avoid common mistakes made by newbies.

Understanding the key principles and applying them to a demo trading account is the best way to learn forex trading technical analysis. Another method to learn is to copy professional traders until you are confident enough to trade on your own. In copy trading, a trader copies the positions of a professional trader, either automatically or manually. Learn more on how to Copy Trade with AximTrade. 


Important news releases that Forex traders should know

There is nothing like economic data releases as one of the strongest catalysts that boost the trading activity during otherwise quiet trading sessions. Economic data announcements can cause currency values to increase or decrease significantly within seconds, especially if the data is contrary to forecasts. Examples of significant news events that impact Forex trading sessions include,

  • Central bank meetings – watched closely for clues to future interest rate changes 
  • Interest rate decisions – by central banks so they can attract more capital and investment, which makes their currencies stronger 
  • CPI data – an indicator of inflation used by central banks 
  • GDP data or Gross Domestic Product – measures all the goods and services produced in a country 
  • Trade deficits or Imports Vs Exports – resulting in greater cross-border capital flows, affecting the exchange rate 
  • Consumer consumption – a major factor driving global and U.S. economic growth 
  • Unemployment rates – a measure of the unemployed, since lower unemployment means more growth and stronger currencies 
  • Consumer confidence – determines how consumers feel about the economy and how they spend 
  • Retail trade – drives economic growth by determining how much consumers spend 

It is best to trade during volatile trading sessions while keeping an eye on new economic data releases if you wish to increase profits. A part-time or full-time trader can set a schedule that gives them peace of mind, knowing that opportunities will not slip away when they take a break or need some rest.

There is a lot more to trading news than it may seem. Aside from the official consensus figure, it is also important to take note of the whisper numbers (the unofficial but unpublished forecasts) as well as any revisions to the previous report. The importance of each release can also be determined by comparing the significance of the country releasing the data with its importance in relation to the other pieces of data being released at the same time.

Pay Special Attention to News from the U.S.

Despite the fact that markets react to economic news from various countries, the biggest movers and most watched news come from the United States. There is no doubt that the United States remains the world’s most powerful country, whether it’s in the realm of military affairs, geopolitics, industry, energy, science, culture, or technology.

This is why it is commonly referred to as a “financial superpower.”

There will never be a currency that can match the strength and influence of the US dollar, despite setbacks, imbalances, and weaknesses. Despite the international financial crisis, the United States still has the largest economy and the dollar is the world’s reserve currency. Due to this, U.S. news and data are important to monitor because the U.S. dollar participates in about 90% of all forex transactions.


Make Informed Trading Decisions with AximTrade 

Keep up with all the important financial market activities with our Economic Calendar and get an overview of the market trends and reports with our Weekly Market Outlook from AximDaily.

Whether you have decided to open a forex account or intend to do so, there are certainly plenty of factors to consider. You might come across queries like How to choose a Forex broker, How much money you need to start Forex trading and so on. Here we have outlined the most important 10 things you should know before you open a Forex Account to make your entry easy.

AximTrade is a fast-growing brokerage service provider in the global markets with a highly advanced MT4 execution and Copy Trade platform. One of the core values of AximTrade is to enable forex traders with easy-to-use technology, educational resources, technical analysis, varieties of forex bonus promotions, and a highly competitive trading environment with the best trading conditions. Read the AximTrade review for more insights about forex trading with a reliable broker.

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