The foreign exchange market is the only market in the world that is open 24/7. Investors are able to place trades every single day of the week, besides weekends. The reasoned that Fx is 24/7 it passed one forex trading hours (session) with another.
We can break down forex in four major trading sessions: the Sydney session, the Tokyo session, the London session and the New York session. Below are tables of the open and close times for each session:
As you can see there is a period of time where two sessions are open at the same time. From 1:00 pm till 5:00 pm, the London sessions and the New York forex trading hours overlap.
As you probably think, these are the busiest time during the trading day, and you’ll be right. When two markets are open in the same time, there is more volume, because during those times market participants are making more transactions.
The graph below describes the average pip movement of the major currency pairs during each trading session:
Here some key characteristics that you should know about the Tokyo forex trading hours:
Action isn’t only limited to Japanese shores. Tons of forex transactions are made in other financial hot spots like Hong Kong, Singapore, and Sydney.
Liquidity can sometimes be very thin. There will be times when trading during this period will be like fishing – you might have to wait a long, long time before getting a nibble.
It is more likely that you will see stronger moves in Asia Pacific currency pairs like AUD/USD and NZD/USD as opposed to non-Asia Pacific pairs like GBP/USD.
During those times of thin liquidity, most pairs may stick within a range. This provides opportunities for short day trades or potential breakout trades later in the day.
Most of the action takes place early in the session, when more economic data is released.
Moves in the Tokyo session could set the tone for the rest of the day. Traders in latter sessions will look at what happened during the Tokyo session to help organize and evaluate what strategies to take in other sessions.
Typically, after big moves in the preceding New York session, you may see consolidation during the Tokyo session.
Here are some neat facts about European forex trading hours:
Due to the large amount of transactions that take place, the London trading session is normally the most volatile session.
Most trends begin during the London session, and they typically will continue until the beginning of the New York session.
Volatility tends to die down in the middle of the session, as traders often go off to eat lunch before waiting for the New York trading period to begin.
Trends can sometimes reverse at the end of the London session, as European traders may decide to lock in profits.
Here are some tips you should know about trading during the U.S. forex trading hours:
There is high liquidity during the morning, as it overlaps with the European session.
Most economic reports are released near the start of the New York forex trading hours. Remember, about 85% of all trades involve the dollar, so whenever big time U.S. economic data is released, it has the potential to move the markets.Once European markets close shop, liquidity and volatility tends to die down during the afternoon U.S. session.