Now that you understand what forex is, why you should trade it, and who makes up the forex market, you should know when you can trade.
It is now time to learn about the various forex trading sessions.
Yes, the forex market is open 24 hours a day, but that doesn’t imply it’s always active during the day. You may make money trading when the market is rising, and you can also make money when the market is falling.
However, it will be extremely difficult to make money if the market does not move at all.
Forex Market Hours
Before we can look at the optimum times to trade, we need to understand what a 24-hour day in the forex world looks like. The forex market is divided into four major trading sessions: Sydney, Tokyo, London, and Trump’s favorite time to tweet, New York.
The FX market has historically had three peak trading sessions.
Rather than attempting to trade the markets 24 hours a day, traders frequently concentrate on one of the three trading times. This is referred to as the “forex 3-session system.” These sessions are the Asian, European, and North American sessions, commonly known as Tokyo, London, and New York sessions. Some traders prefer to separate sessions by continent names, while others prefer to use city names.
The International Dateline
The International Dateline is traditionally where the next calendar day begins. Because New Zealand is a significant financial center, the currency markets open on Monday am when the rest of the globe is still on Sunday.
Even though trading begins in New Zealand, it is commonly referred to as the Sydney session. It doesn’t make sense, but we don’t write the rules.
There is no formally closed period throughout the week until Friday, though there is a brief slowdown in activity between around 19:00 and 22:00 GMT when most American traders have gone home and most Kiwi and Aussie traders are getting ready for work.
Apart from weekends, there are just two public holidays when the entire FX market is closed: Christmas and New Year’s.
The following tables show the start and end times for each session:
Actual open and closing timings are determined by local business hours, with most hours beginning between 7-9 AM local time.
Daylight Savings Time
Open and closing times will also vary during the months of October/November and March/April as several nations (including the United States, the United Kingdom, and Australia) transition to and from daylight savings time (DST).
The day of the month on which a country switches to/from DST also varies, further perplexing us.
And because Japan does not observe daylight savings time, thank you for keeping things simple.
You’re undoubtedly wondering why the Sydney Open has shifted two hours in Eastern Timezone. When the United States adjusts for standard time, Sydney’s Open moves forward by one hour. However, when the United States changes back one hour, Sydney advances forward by one hour (seasons are opposite in Australia).
Remember this if you ever plan to trade during that time period. Dealing with DST is inconvenient, but that’s what happens when a market trades 24 hours a day, seven days a week! It’s vital to keep in mind that the forex market’s opening hours will change in March, April, October, and November when countries switch to daylight savings time on various days.
Trading Session Overlaps
Take note that there is a period of time between each forex trading session when two sessions are open at the same time.
For example, during the summer, the Tokyo and London sessions overlap from 3:00-4:00 AM ET.
In the summer and winter, the London and New York sessions overlap from 8:00 AM to 12:00 PM ET.
Because there is more volume when two markets are open at the same time, these are the busiest hours of the trading day. This makes sense because everyone in the market is wheeling and dealing at that time, which means more money is changing hands. Now consider the average pip movement of the major currency pairs during each period.
The table shows that the London session typically has the most movement.
Take note of how some currency pairs show far bigger pip changes than others.
You can use our MarketMilkTM tool to see the average pip change for specific currency pairs in real-time.
For example, the volatility per hour for EUR/USD filtered by London and New York sessions is as follows:
Next Lesson: When Can You Trade Forex: Tokyo Session