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Trading Sessions

Sunday, 20 August 2017 21:24
Trading Sessions

Trading sessions are the time of the most active trading on the world exchanges. As you know, the Forex market works around the clock. When the evening ends somewhere in the world, the exchanges close. The morning comes on the other side of the globe, and the trading starts in the other part of the world. Thus, Forex works continuously, except the Saturdays and Sundays, when all global markets have a weekend. Also, exchanges don’t work for Christmas, Easter and New Year.

There are four trading sessions:

  • Asian;
  • European;
  • American;
  • Pacific.

Different currencies are traded more or less active, depending on the times of the day. For example, the yen is most active during the periods of Asian exchanges work, and the euro - during the European session. The American session is the most active so that the dollar rate may fluctuate significantly within it.

Each of the markets has its characteristics, and we will consider them in more detail below.

Asian Trading Session

During this period, the most active are the conversion transactions of such pairs as EUR/USD, USD/JPY, EUR/JPY, and AUD/USD.

Since the Asian exchanges open first, their trades can affect the whole day. First, the Tokyo Stock Exchange opens, after it, Hong Kong and Singapore start working.

Most deals are made with currency pairs of the Japanese yen, for example, USD/JPY and EUR/JPY. The EUR/USD pair also starts being traded, but the market, as a rule, doesn’t feel sharp fluctuations, unless the Japanese bank enters it.

The most active changes in the price levels can be observed when data on the balance of Japanese financial organizations is published. Quotations of the yen at this time can serve as a guide for those who trade this currency.

European Session

The highest level of major currencies volatility is observed right after the opening of the London Stock Exchange. Activity declines at the lunchtime and rises again at evening.

Considering the enormous amount of money concentrated in Europe, this session strongly affects the currency quotes.

American Session

Trading on Forex, you can see the most significant fluctuations in the asset value during the American session. Trading will be dynamic when the New York Stock Exchange opens, and US banks become more active. After a while, the European traders return from lunch, supporting the dynamic trading process.

After the closure of European banks, there is an increase in volatility on the market.

American traders are considered the most aggressive ones.

Pacific Trading Session

During such a period, the Forex market is calm. It is because only New Zealand and Australia participate in trading.

A new surge in activity will be observed only with the opening of the Asian market.

Importance of Trading Sessions for a Trader

The trading day begins with the opening of Asian exchanges. At this time, it’s worth paying particular attention to such currencies as the yuan, the yen, and the Singapore dollar. At this period, quotations of local currency are changing actively, since Asian countries have the large export volumes.

However, the most active trade is observed during the work of European exchanges. There are large investment organizations and financial companies concentrated here.

The peak volatility of the market falls in the period of the London Stock Exchange work, at 7:00 GMT. The European traders’ lunch break starts at 10:00-11:00.

Also, European currencies are traded during the work of American market. At the same time, the most important financial news is published.

American market participants can cause substantial fluctuations within low liquidity when the European session closes, and they stay on the market alone.

Using the Trading Schedule

Given the data above, we can conclude that some rules will make the trade more profitable.

  1. During the Asian session, it’s worth making deals with the yen;
  2. The greatest activity of the market falls at the time of 7: 00-11: 00, and from 12:00 to 14:00 GMT;
  3. Don’t forget about your open transactions between the sessions. At this time, the market isn’t liquid enough to maintain the price level, which can lead to strong impulses;
  4. During the New Year holidays, when exchanges are closed, it’s worth to be most careful;
  5. Remember that sessions opening often leads to the appearance of gaps on the asset charts.

Watch the schedules of the currency markets, and make the successful transactions on time!

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Donald	Hardy
Donald Hardy

Trader. I do researches in Forex market, I regularly conduct a fundamental analysis of the market, keep my own blog, create new technical tools and develop strategies