One of the best features of the forex market is that it is open 24 hours a day. This is because trading in the forex market encompasses the exchange of all currencies all over the globe, which means that the market is functioning whenever a financial market is open anywhere in the world.
On Monday, the forex market opens as early as the Sydney market open or Tokyo trading session, and it closes when the New York trading session is over on Friday. Because of that, traders are able to open and close anytime within the week as there is a continuous transition between forex trading sessions.
The entire forex trading day can be broken down into three main sessions. These are the Asian session, the European session, and the U.S. session.
The Asian trading session takes place when Australian and Asian markets are open for trading. Sydney market hours or Tokyo financial market hours are included in this trading session. This is why Asian currencies, such as USD/JPY and yen pairs, and Oceanic currencies, such as NZD/USD and AUD/USD enjoy higher liquidity in the Asian session. Economic figures from New Zealand, Australia, and Japan are also usually reported around this time.
Meanwhile, the European session is open when European banks are open, so this includes German banking hours to those of the United Kingdom. European pairs, such as GBP/USD, USD/CHF, and EUR/USD are very actively traded and liquid during this forex trading session. Japanese yen crosses with the British pound, euro, and Swiss franc are also generally liquid during this session. It is also during this time that the U.K., Switzerland, and euro zone print their economic reports.
The U.S. session comprises the New York trading hours and the Canadian markets. Dollar pairs are very active during this time of the day as the U.S. typically releases its economic reports during this session. Major currencies such as EUR/USD, GBP/USD, USD/CHF, USD/CAD, USD/JPY, AUD/USD, and NZD/USD are very liquid during the U.S. session.
There are also overlaps between these trading sessions as one market opens while another is about to close. During these overlaps, there is a higher number of traders who are actively entering and exiting trades, which means there's more liquidity and price action during these hours.
In this case, there is a good potential to make profits off reversals or quick bounces from support and resistance levels. This is because there are targets or stops located around those areas and traders who scalp might just decide to book their profits or losses for the day.
On Monday, the forex market opens as early as the Sydney market open or Tokyo trading session, and it closes when the New York trading session is over on Friday. Because of that, traders are able to open and close anytime within the week as there is a continuous transition between forex trading sessions.
The entire forex trading day can be broken down into three main sessions. These are the Asian session, the European session, and the U.S. session.
The Asian trading session takes place when Australian and Asian markets are open for trading. Sydney market hours or Tokyo financial market hours are included in this trading session. This is why Asian currencies, such as USD/JPY and yen pairs, and Oceanic currencies, such as NZD/USD and AUD/USD enjoy higher liquidity in the Asian session. Economic figures from New Zealand, Australia, and Japan are also usually reported around this time.
Meanwhile, the European session is open when European banks are open, so this includes German banking hours to those of the United Kingdom. European pairs, such as GBP/USD, USD/CHF, and EUR/USD are very actively traded and liquid during this forex trading session. Japanese yen crosses with the British pound, euro, and Swiss franc are also generally liquid during this session. It is also during this time that the U.K., Switzerland, and euro zone print their economic reports.
The U.S. session comprises the New York trading hours and the Canadian markets. Dollar pairs are very active during this time of the day as the U.S. typically releases its economic reports during this session. Major currencies such as EUR/USD, GBP/USD, USD/CHF, USD/CAD, USD/JPY, AUD/USD, and NZD/USD are very liquid during the U.S. session.
There are also overlaps between these trading sessions as one market opens while another is about to close. During these overlaps, there is a higher number of traders who are actively entering and exiting trades, which means there's more liquidity and price action during these hours.
In this case, there is a good potential to make profits off reversals or quick bounces from support and resistance levels. This is because there are targets or stops located around those areas and traders who scalp might just decide to book their profits or losses for the day.
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Which among the different forex trading sessions should you trade? Take a look at these articles that explain what happens in each trading session A fantastic read.
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