How is the time ticking in Forex?

Trading Forex sessions

Learning WHEN you should trade is as important as the other trading lessons. 

It is vital to know the difference between the forex trading sessions and choose which one fits your daily routine. 

We all know that the forex market is open 24 hours a day, but a new revelation is coming to light. The market is NOT active the entire day.

Forex Market Hours

A trading session is that period of time when the currency day trading happens at a specific location. 

The market has four major trading sessions with opening/closing hours based on the biggest financial centres: the Sydney session, the Tokyo session, the London session, the New York session.

There are three peak trading sessions, which are the same as the mentioned above, in the exception of Sydney. 

Some people call them by continent names – Asian, North American and European sessions. 

As a trader, you should probably choose one of the three trading periods, rather than trying to trade the markets 24 hours per day.

The International Date Line is where, by tradition, the new calendar day starts.

Remember the time zones – when it is Monday morning in New Zealand, it is still Sunday in most of the world. This means that trading starts first in New Zealand. 

Why do they call it Sydney session? You have to refer your question to the Kiwis, they might know. 

Until Friday, there is no time during the week when the market formally closes. 

Although there are a few hours that the activity goes down (between about 19:00 and 22:00 GMT) when most American traders have gone home and most Kiwi and Aussie traders are getting ready for work.

Even the Forex market needs a break for a holiday. Can you guess which are the only two days when the market is closed?

Your birthday? Earth’s birthday? Warren Buffet’s birthday? 

Nope, nope, nope. 

Jesus Christ’s birthday. 

The Forex market is closed on Christmas and New Year’s Day. 

Actual open and close times are based on local business hours, with most business hours starting somewhere between 7-9 AM local time. You can see the opening and closing hours of each session in the tables below.

Fall/Winter in the U.S. (October/November – March/April)

Spring/Summer in the U.S. (March/April – October/November)

Daylight Savings Time

When seasons are changing, the world shifts to Daylight savings time (DST).

That’s why open and close times vary during October/November and March/April.

Countries shift to/from DST on a different date, which makes things even more complicated. 

An exception to the rule is Japan, which doesn’t shift to daylight savings. 

Now, you’re probably looking at the Sydney Open and wondering why it shifts two hours in the Eastern Time Zone.

In Australia, seasons are opposite to the rest of the world. Meaning that when the U.S. shifts one hour back, Sydney actually moves forward by one hour. 

You have to be careful if you decide to trade during this period of time. 

You never knew that reading the clock can be so confusing! Now it starts making sense why every stock exchange market in the movies has at least 3 different clocks on the wall. 

It’s important to remember that the forex market’s opening hours will change in March, April, October, and November, as countries move to daylight savings on different days.

Trading Session Overlaps

There is a period of time where two sessions are open at the same time that happens in between each forex trading session.

Some of the most active market times will occur when two or more of those market centers are open at the same time.

For example, during the summer, from 8:00 AM – 9:00 AM GMT, the Tokyo session and London session overlap. 

This one is the least busy of the overlaps because it is during the night in the USA, which makes it a very inconvenient time for the USA traders. 

Another one is during both summer and winter from 1:00 PM – 5:00 PM GMT, the London session and the New York session overlap.

This one is the busiest, because of the volume of participants in the trading since London and New York are the largest financial centres. 

In the table below we will see the average pip movement of the major currency pairs during each forex trading session.

You can notice that most of the changes occur during the London trading session and some currency pairs have much larger pip movements than others.

Concentrate your trading activity during the trading hours for the three largest market centres: London, New York, and Tokyo. Most market activity will occur when one of these three markets open.

Let’s take a more in-depth look at each of the sessions.

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