Forex Trading 101: Best Currency Pairs to Trade in Each Trading Session

Forex Trading 101: Best Currency Pairs to Trade in Each Trading Session 

The famous phrase ‘Money Never Sleeps’ sums up the forex market quite well. The fact that forex trading is decentralized and always open for business, it’s like a global marathon with four trading sessions, running 24/5. However, not all currency pairs are shining stars in every trading session. It is imperative that you choose your currency pairs carefully for each trading session to achieve profits! 

What is a Forex Trading Session? 

In a nutshell, a trading session is basically the time frame when a foreign exchange or financial market is open for trading. It’s the window when investors can buy and sell things like stocks, bonds, futures, and forex currencies. Different financial markets have different trading hours, so each market’s trading day is called a trading session. The trading session differs by location when it comes to foreign exchange. 

Forex Market and Trading Sessions: What You Need to Know 

Name a market that never gets tired, handles trillions of businesses, with participants from every nook and corner of the world. You guessed it – the Foreign Exchange Market (Forex), where currencies from different nations mingle. The Forex market is open 24/5, from 22:00 GMT on Sundays until 22:00 GMT on Fridays. That’s right, it never sleeps!  

Trading sessions

Let’s break down this currency extravaganza into four major trading sessions: 

  • Sydney Session: The Sydney session kicks off at 10:00 p.m. GMT and calls it a day at 7:00 a.m. GMT. It’s a calm and collected session, perfect for pairs like AUD/USD, NZD/USD, and USD/JPY. 
  • Tokyo Session: The Tokyo session starts at 12:00 a.m. GMT and bids farewell at 9:00 a.m. GMT. It teams up with Sydney for a while. Tokyo brings moderate volatility and liquidity to the mix. It’s the time for yen pairs like USD/JPY, EUR/JPY, and GBP/JPY. 
  • London Session: The London session bursts onto the stage at 8:00 a.m. GMT and wraps up at 5:00 p.m. GMT. It joins hands with both Tokyo and New York. London steals the show with its bustling energy and liquidity. It’s prime time for major pairs like EUR/USD, GBP/USD, and USD/CHF. 
  • New York Session: The New York session enters the scene at 1:00 p.m. GMT and takes its final bow at 10:00 p.m. GMT. It shares a dance with London for a few hours. New York knows how to turn up the volume and keeps the heat on. Get your groove on with pairs like USD/CAD, USD/JPY, and USD/CHF. 

As a beginner Forex trader, you may feel like a lost child in the midst of so many currencies and fancy instruments on the MetaTrader 4 stage. But don’t worry, we’ve got you covered! Let’s get those questions answered in style! 

How to Choose the Best Trading Sessions to Trade? 

To succeed in forex trading, it’s best to trade during the most active market periods. This is when trading spreads narrow, putting more money in traders’ pockets instead of market makers. The optimal trading time depends on factors like your availability, time zone, and trading style.  

  • For low volatility, target the Asian trading session.  
  • For high volatility, trade during the London or New York sessions.  
  • Overlapping sessions offer the greatest opportunity, especially the London/New York active hours.  

To trade successfully, understand market hours, adjust strategies, and stay informed using the economic calendar

How to Choose the Best Forex Pair in a Trading Session? 

There are several factors to consider when selecting the best currency pair for a trading session. The following tips will help you: 

  1. Volatility: Choose currency pairs with higher volatility during your target trading session. Trading opportunities can be increased by higher forex volatility. For example, during European and American sessions, EUR/USD and GBP/USD are more active. 
  1. Liquidity: Choose currency pairings that have a high trading volume and liquidity. As a result, the market is sufficiently busy, and spreads are sufficiently narrow to allow for efficient trading. The most traded currency pairings are EUR/USD, USD/JPY, and GBP/USD. 
  1. Session-specific pairs: Certain currency pairs outperform others during specific trading sessions. USD/JPY and USD/CHF, for example, change often during European and American sessions. The USD/NZD, USD/AUD, and USD/JPY rates move faster during the Australian session. 
  1. News and events: Take into account the effect of news and economic events on currency pairings. Major news releases and economic data can have an impact on some currency pairings. EUR/USD, for example, is influenced by Eurozone news. 
  1. Personal preference: Consider your personal trading strategy, risk tolerance, and trading hours. Because the EUR/USD and EUR/GBP pairings are less volatile at night, you can trade them at that time if you wish. 

Make sure to undertake comprehensive research and analysis before making any trading decisions. Consider employing technical analysis, fundamental research, and market sentiment analysis to narrow down your currency pair choices. 

Best Currency Pairs in Different Trading Sessions 

The best currency pairs to trade can vary depending on the trading session and market conditions. Here are some general guidelines for each session: 

Which Major Forex Currencies Performed Well In 2022?

Sydney Session (Asian Session):  

During the Sydney session, which typically starts around 00:00 to 09:00 GMT, currency pairs involving the Australian Dollar (AUD) and the Japanese Yen (JPY) tend to be more active. Some examples include: 

  • AUD/USD 
  • AUD/JPY 
  • NZD/USD 

Tokyo Session (Asian Session):  

The Tokyo session, usually from 00:00 to 09:00 GMT, sees increased activity in pairs involving the Japanese Yen (JPY) as well as some other Asian currencies. Example pairs include: 

  • USD/JPY 
  • EUR/JPY 
  • GBP/JPY 

Sydney and Tokyo Session Overlap:  

This overlap occurs around 00:00 to 03:00 GMT and is characterized by higher volatility. Pairs involving AUD, JPY, and NZD tend to be active during this period. 

London Session (European Session):  

The London session, from 07:00 to 16:00 GMT, is one of the most active sessions. Major currency pairs involving the Euro (EUR), British Pound (GBP), and US Dollar (USD) tend to be highly traded. Example pairs include: 

  • EUR/USD 
  • GBP/USD 
  • USD/CHF 

New York Session (US Session):  

The New York session, which runs from 12:00 to 21:00 GMT, also experiences high trading activity. It overlaps with the end of the London session. Major USD pairs are most active during this time: 

  • EUR/USD 
  • USD/JPY 
  • GBP/USD 

London and New York Session Overlap:  

This overlap occurs from 12:00 to 16:00 GMT and is one of the most volatile periods in the forex market. Pairs involving EUR, GBP, and USD tend to have increased trading activity. 

Remember that these are general guidelines, and market conditions can vary. It's essential to consider other factors such as economic news releases, geopolitical events, and do market sentiment analysis when making trading decisions. 

How Does the Trading Session Affect Currency Pair Movements? 

Each trading session is going to be slightly different in terms of the volume, volatility, and activity of certain currency pairs. 

  • During overlapping trading sessions, higher liquidity and trading volume occur due to major financial centers being active simultaneously. This can lead to increased volatility and larger price movements in currency pairs.  
  • Each session corresponds to a financial center’s business hours, e.g., the London session overlaps with Asian and North American sessions, fostering high trading activity.  
  • Traders from diverse regions influence currency pairs through strategies and sentiment. Trading sessions align with key economic data releases.  
  • The London session reacts strongly to Eurozone and UK data, causing short-term currency fluctuations.  
  • Certain sessions, like Asian, thrive on cross-border transactions, e.g., Japanese Yen’s activity due to Japan’s export economy. 
  • Session sentiment impacts currency pairs; positive news strengthens a currency, while negative news weakens it.  
  • Notable are overlapping sessions like London-New York, merging Atlantic trading for elevated volatility.  
  • Each session has distinct traits, e.g., Tokyo has narrow ranges and less volatility than London/New York, guiding tailored strategies. 
  • Various participants—central banks, corporations, and retail traders—shape currency movements across sessions. 

Traders must be aware of these factors and adjust strategies to navigate the changing forex conditions effectively. 

Relation Between Forex Spread and Trading Sessions? 

The relationship between forex spreads and trading sessions is like a dance influenced by market liquidity. Liquidity ensures smooth buying and selling without price fluctuations. Higher liquidity leads to tighter spreads, keeping traders in sync. 

During major trading sessions, especially when London and New York overlap, volume and market participation increase. This pumps up liquidity, narrowing spreads and reducing trading costs. Watch out for unexpected guests like economic data or geopolitical news causing temporary spread widening. 

Smart traders hit the dance floor during high liquidity sessions for tight spreads. So put on your dancing shoes and groove with the forex market! It’s all about finding rhythm amidst occasional twists and turns. 

Copy Trade – Follow Today, Lead Tomorrow 

Why is it Important to Choose a Low Spread Forex Broker? 

Choosing a low-spread forex broker has significant advantages. It reduces upfront costs, as spreads serve as commissions. Lower spreads mean lower trading costs for you. Additionally, low-spread brokers offer direct trading with quotes close to current market rates. This makes it easier to calculate potential profits and losses, allowing for a more informed trading strategy.  

If you’re a day trader, prioritizing a lower spread forex broker is essential. AximTrade Standard account offers the lowest spread in the market, starting from 1 pip on all majors with 0% commission rates. At AximTrade, we collaborate with top liquidity providers for competitive pricing, ensuring our spreads rival the best globally. 

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