FOREX trading has different sessions including the Sydney session, Tokyo session, London session and the New York session as the four major trading sessions. Sydney opens at 10:00PM GMT while Tokyo opens at 11:00PM, London opens at 7:00AAM, and New York opens at 12:00PM. Closing on the other hand are at 7:00AM Sydney, 8:00AM Tokyo, 4:00PM London, and 9:00PM New York. If you were to look closely there were times when two sessions are open. This is called session overlap and also an indication of more participants, thus a better time to trade.
However, before you finally decide as to which market session to trade, let us know first the normal market movement for each session.
During Tokyo sessions market movement especially to non-Asian pair like GBP/USD or GU will most likely to move slowly. Trade participants during this market session are more of commercial companies like exporters and central banks. Trading during this session may require traders to have enough patience as traders need to wait for long before the market moves to their direction.
So, during this session, which pair should one trade? During this session, it is best to trade the AUD or JPY pairs especially when Chinese news comes in.
Ever since, London was the center of trade. This can be due to the country’s strategic location and because of this; London became the FOREX capital of the world. Thousands of businessmen are having transactions every minute and majority of the traders are keeping their eye on the London market making it 30% of the FOREX transaction takes place in this session.
During the London session, the market has the tendency to get highly volatile because of the large amount of transactions that took place during the session. Generally, trends starts during London session, slows down at the middle of the session and continue until the beginning of the New York session. However, there are also some time that trend tend to reverse at the end of the London session because there are times that European traders decide to lock in profits.
During the London session, it is best to trade currency pairs like EUR/USD, GBP/USD, USD/JPY, and the USD/CHF. These pairs are the ones directly influenced when the European news comes out.
In the midst of the London session, starts the US session. The New York session cause the market to become highly volatile as it starts since it overlaps with the London session. The beginning of the New York session is when most economic reports come out. Keep in mind that US dollars have the involvement in almost all trades, thus every US economic data release; the market movement will definitely gets affected.
In the afternoon of the US session, volatility normally slows down when the European market close. When Friday afternoon comes, the market will already have a little movement when the Asian market starts on their weekly night outs as well as the European markets. Possible reversals also took place on a Friday when US traders close their positions to avoid weekend news exposures if there is any.
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