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The FX market—often referred to as the foreign exchange market—operates within four distinct trading sessions, 24 hours a day five days a week. The Forex market opens at 10 pm GMT on Sunday and closes at 9 pm GMT on Friday. Note that the FX market is closed on weekends. Trading sessions are grouped via the Sydney session, the Tokyo session, the London session, and the New York session. However, many traders generally concentrate in Tokyo, London and New York time zones.
New traders are encouraged to understand each trading session’s timing and overall influence on the currency market. The key point to recognise is that while the FX market’s global nature allows traders and investors the flexibility to access the market in any time zone, trading conditions (liquidity, volume, and volatility) may not be appropriate for your trading style and trading strategy. Thus, knowing what each session brings to the table is a must for traders. In addition to this, there are points in the day where trading sessions overlap and can deliver volatile trading activity.
Sydney Session (Asian Pacific Trading Session)
Although market participants refer to this session as the ‘Sydney session (Australia)’, this largely includes New Zealand’s time zone; based on GMT, Sydney’s Forex trading hours are from 9 pm to 6 am.
According to volatility, and while this can vary depending on market conditions, Sydney’s session typically observes notable activity in the following currency pairs: AUD/NZD, USD/CHF, AUD/JPY, GBP/USD, EUR/USD, and USD/JPY.
Ranging markets are standard viewing within this session; liquidity tends to be thinner than in the more liquid sessions in London and New York. Therefore, traders with a focus on range-based trading methodologies may find the volatility within this session more suitable.
Tokyo Session (Asian Pacific Trading Session)
Tokyo’s trading session works from midnight GMT until 9 am. Similar to trading conditions in Sydney, Tokyo is considered a range-based trading session. Currency pairs that often generate interest in the Tokyo session are EUR/JPY and USD/JPY. Note that the Euro and the Japanese yen are two of the most heavily traded currencies in the world.
London Session (European Session)
The London session runs from 7:00 am to 4:00 pm GMT. Among other major currency pairs, two active currency pairs within this session are GBP/USD and EUR/USD.
During the London session, which is popular with breakout traders, volatility generally increases. This is particularly evident when the London and US session overlaps (midday to 4 pm GMT). These are the world’s two major market hubs and during this four-hour overlap period rapid price movements may occur.
Breakout trading can include strategies as simple as trading the break of round numbers, such as $1.2000. Or, for more advanced technical analysis, traders may look to attempt to trade the breakout of support and resistance levels (consolidations). Though this will be slightly more subjective than the objectivity of round numbers.
New York Session (North American Trading Session)
North America opens its doors at 8 am New York time and closes at 5 pm local time (midday until 9 pm GMT). However, note that the New York Stock Exchange (NYSE), the world’s largest stock exchange in market capitalisation, opens at 9:30 am New York time and closes at 4 pm (local time).
Active currency pairs within the New York session are EUR/USD, USD/JPY, GBP/USD, EUR/JPY, GBP/JPY, and USD/CHF. Of course, though, volatility can change according to market conditions.
A key point to recognise is the New York open can often see price reverse from London, especially if a trend was present during Asia and London trading sessions. This will occur during the overlap between the US and London markets, as highlighted above.
Is There a Best Time to Trade Forex?
The best times to trade tend to be when the financial market is active (liquid). When more than one of the four above markets open simultaneously (overlap), the trading environment usually becomes more active and can deliver potentially lucrative trading opportunities.