Trading Session: Find Out When Various Markets Are Open
The international currency market has one distinct feature – it is open 24 hours per day and five days in a week. A single trading day in the market, however, is not dominated by one only market exchange, but engages a network of exchanges and brokers around the globe. Lastly, it is important to adapt your risk management strategy to account for forex session time changes. Volatility and liquidity can vary significantly between sessions, which can impact your trading performance and risk exposure. Sydney, Australia (open 5 p.m. to 2 a.m.) is where the trading day officially begins. Experienced traders know what is better than to spread their action over the entire 24-hour period.
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- While most brokers suspend trading during the weekend, the fact is that economic news and geopolitical events still occur on Saturdays and Sundays.
- For example, the NASDAQ and the New York Stock Exchange are located in, you guessed it right, in New York; The London Stock Exchange is located in London, and the Tokyo Shoken Torihikijo is based in Tokyo.
- When trading currencies, a market participant must first determine whether high or low volatility will work best with their trading style.
- Noting the specific times of each trading session will assist forex traders in developing their trading strategies around this data.
- When companies merge, and acquisitions are finalized, the dollar can gain or lose value instantly.
Every trading day is comprised by four different parts, which are usually referred to as ”trading sessions” by market players. Currency pairs are traded from Sunday afternoon EST (Eastern Standard Time) to Friday afternoon EST. This means that during the week there is always at least one financial center open for business, facilitating investors intention to enter into trades. As one market closes for the night, another opens elsewhere on the globe. When you first came to know about the global currency market, you probably came in touch with marketing materials claiming that this market remains open 24 hours a day and seven days a week.
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Those few trading hours are the most intensive ones, with prices making large swings around fixing times. As a trader, one should notice a decrease in trading activity or in the way the market is moving by the time the London session closes and only the North-American session is on. Traders need to be aware of the different Forex trading sessions to take advantage of the different trading opportunities available. For example, during the European and North American sessions, traders can expect high volatility, which means that there are more significant price movements, making it easier to make profits.
One important thing to be mentioned here is the fact that the two most important trading session, the London and the North-American one, are overlapping. This means that, effectively, when the North-American session starts, the London is still open for business. Incorporate knowledge of Forex session hours into your financial planning and practice.
Pacific Trading Session
When a currency pair sharply goes up or down with no transaction in between, it is represented in a price gap. For example, AUD/JPY will experience a higher trading volume when both Sydney and Tokyo sessions are open. And EUR/USD will experience a higher trading volume https://www.bigshotrading.info/ when both London and New York sessions are open. The best time for you to trade forex will depend on which currency pair you’re looking to trade. You usually want to avoid trading when only one trading session is open and instead, wait for trading sessions to overlap.
Rather, it consists of a number of large banks and brokerage firms that trade currencies with themselves. The forex market is open 24 hours a day, five days per week, from Sunday evening until Friday night. In this article, we will explore each of these forex market sessions including their key characteristics – forex time zones and how they affect trading.
Floating Exchange Rate
Use the below Forex Market Clock to check where your current time is in relation to the 4 major Forex Trading Sessions (Sydney, Tokyo, London and New York). Knowing the forex market’s operating hours is essential for a trader. You need to know when the forex market opens and closes as well as the four main trading sessions. One thing to note is that because several of the major European stock markets are an hour ahead of London meaning that you’re likely to see a spike in volatility an hour before the “forex” London Open.
In such cases, it may be advisable to reduce your position size or avoid trading altogether to minimize potential losses. It is important for traders to understand the timings and characteristics of each session to determine the best times to trade. For example, the Asian session is known for its lower volatility, while the European session tends to be more volatile due to overlapping with the Asian session. The North American session, on the other hand, is known for its high liquidity and volatility. When only one market is open, currency pairs tend to get locked in a tight pip spread of roughly 30 pips of movement. Two markets opening at once can easily see movement north of 70 pips, particularly when big news is released.
New York Session
To illustrate the situation at the opening of the New York trading session, take a look at figure 5 to see how the trading volume spiked up the moment market opened. If you are a Forex trader who applies breakout trading strategies, it makes perfect sense to look for breakout trades at the opening hours of the London market open. To do so, of course, you need to trade in smaller time frames like the 5-minute or the 15-minute charts. These market-moving transactions happen among large banks during their respective banking hours.
The currency pairs that typically have a fair amount of action are USD/JPY (or U.S. dollar vs. Japanese yen), GBP/USD (British pound vs. U.S. Dollar), and GBP/JPY (British pound vs. Japanese yen). The USD/JPY is an especially good pair to watch when the Tokyo market is the only one open, because of the heavy influence the Bank of Japan (Japan’s central bank) has over the market. The London session is responsible for around 30% of the trading volume, which is the highest among all major Forex market sessions around the world. Hence, often major trends start and end during the London Forex market hours.
Since the forex market is global, it operates across different time zones. To facilitate trading across these different time zones, the forex market uses Coordinated Universal Time (UTC), also known as Greenwich Mean Time (GMT), as its standard reference time. For example, if you are trading the European session and there is a major economic data release from the Eurozone, it can lead to increased volatility and trading opportunities. By staying informed about these events, you can adjust your strategy accordingly and take advantage of potential market movements. If you are a swing trader or a position trader, you may not need to make major adjustments to your trading hours.
