FOREX market is active 24h/24h from Monday to Friday, due to time zones around the world. Thus, at the same time the banks from one country close and banks from other countries open, ensuring a continuous activity.

Market activity takes place in 4 cyclical Sessions - associated with market’s activity in 4 major areas around the globe. 
Each Session has certain characteristics that need to be taken into account to develop an appropriate trading strategy.

 

 

• Continuous market activity has advantages especially for those who want to trade only part-time, giving them the opportunity to choose the time frame most appropriate for their own time zone and schedule.
• However, market opportunities are greater in some Sessions.
• A larger number of market participants means a larger number of trades, therefore a higher volatility and more winning opportunities. The biggest number of participants is recorded when the market sessions overlap. 
• On the contrary, the fewest opportunities are when the market doesn’t move.
• The largest volumes are traded during the London Session.

 

Market Sessions’ characteristics

Each of the 4 Sessions (we will focus on the first 3) has peculiarities that should be considered when developing an appropriate trading strategy as follows.

Asian Session / Tokyo Session

 

 

 

 

• Tokyo is the financial capital of Asia. JPY ranks third among the most traded currencies - 16.5% of total transactions involve JPY, therefore the start of this great financial centre start of its market is associated with the very beginning of the Asian Session.
• Asian Session’s opportunities are not limited to Japanese markets. Hong Kong, Singapore and Sydney are also important financial centres.
• The Japanese economy is closely related to exports, so the main participants of the Asian Session are the Big Exporting Companies and the Central Banks.
• Frequently, liquidity can be extremely low, offering less opportunities, especially on non-Asian pairs (for example, GBP / USD, EUR / CHF). Higher movements may be seen at Asia-Pacific countries’ currencies, as AUD / USD, NZD / USD.
• Generally, when liquidity is low, most quotes linger at certain levels, when we may go for short term trades or trade the Breakouts (the concept will be explained later).
• As a rule, the most meaningful moves occur at the beginning of the session, when most news appear.
• Asian Session’s movements can give the tone of a day, the participants of the next sessions paying them attention to develop the work strategies for the day.
• As a rule, the major directions of the American Session strengthen during the Asian Session.

What pairs can we trade on the Asian Session?
We can trade based on news from Australia, New Zealand and Japan.
Given the large participation of commercial companies, there may be opportunities on JPY pairs.
Chinese demand strongly influences AUD and JPY. China's news amplifies market volatility by opening up winning opportunities.

European Session / London Session

 

 

 

Since ancient times, London's strategic position on the map has opened its doors to intense commercial and financial activity. London is considered the FOREX Market’s Capital.
Approximately 35% of the market activity takes place during the London Session. This is due to two factors: London is an important financial centre and its financial activity overlaps with the American Session.

• It has high liquidity and, most of the times, lower trade costs.
• As a rule, it has a high volatility, which tends to lower at the middle of the Session (most traders pause during this time, preparing for the American Session).
• Most of the trends are emerging during the London Session and often continue until the beginning of the American Session.
• Towards the end of the session, trends can reverse (many traders can choose to close their positions, securing their profits).

What pairs can be traded during the European Session?
Extremely high liquidity during this session allows trading any pair.
However, Majors as EUR / USD, GBP / USD, USD / JPY, USD / CHF, typically have some advantages:

• usually the spreads are smaller for the majors
• these pairs are directly influenced by the European Session’s news.

​
JPY crosses, as EUR / JPY and GBP / JPY, may also offer some opportunities. These pairs are volatile during London session and may have a slightly higher spread.

American Session / New York Session - Aggressive Session

 

 

 

The United States is a major financial centre of the world. 85% of all trades involve USD pairs (Majors).
THE AMERICAN DOLLAR AND THE NEWS ABOUT AMERICAN ECONOMY HAVE A PARTICULAR IMPORTANCE IN FOREX.

• The highest liquidity occurs at the beginning of the Session, when it overlaps with the European Session.
• Once the European Session ends, volatility and liquidity decrease.
• Friday afternoons price movements are generally insignificant, but there may also be trend changes because many traders may close their positions to protect themselves from possible unfavourable weekend news.

What pairs can be traded during the American Session?
The liquidity and volatility that characterize the beginning of this Session, generally, allow trading all pairs.
We advise you to stick with the Majors and stay away from the exotic ones. The focus should be on USD.

 

When is the best time of day to trade?
Obviously, the answer is - when the market offers opportunities.
In our case, the opportunity means liquidity. The liquidity of the market is given by as many participants as possible – the best example is the overlap between the European and the American Sessions.
Then there comes the main news related to USD (from America and Canada), as well as the latest news from European Session, that can bring significant changes in the market.

Typically, the trends outlined in the European Session continue in the American session. However, there may also be situations where many European traders close their positions at the end of the London Session, generating irregular price movements just before noon in the US.

! The overlap between the Asian Session and the European Session is not as volatile like the one between the European Session and the American Session. The reasons are as follows:

• The Asian Session is generally unlikely to be volatile, and the volatility is unlikely to occur at the end of the session.
• The low volatility of the Japanese Session determines European traders to focus on the next one, especially on European-American Overlap.

 

The best days to trade
On certain days of the week, the market has more movements than others.
The highest earnings are usually recorded in the middle of the week (Tuesday, Wednesday and Thursday). On Fridays market activity is limited to the first part of the day, in the second half of the American Session volatility and liquidity decline.
So, the weekend starts earlier for traders!
 

Inappropriate moments for trading

• Fridays, especially on afternoon (for the reasons previously shown)
• Sundays and holidays (few participants in the market)
• Before / During important news – they can overturn the market situation
• When you are distracted or tensed.

​CONCLUSION: The best trading opportunities are offered by the Overlay of the European Session with the American Session, when also may appear important news that can increase volatility and influence the trends. 

ANY TRADER MUST KNOW WHEN IT IS AND WHEN IT IS NOT APPROPRIATE TO TRADE!
! Keep in mind: trading a lot doesn't necessarily mean a bigger gain. Manage your time and trades effectively. Time is the most important resource and timing is a key element in trading.