Forex Trading Sessions: When and How to Trade

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Let’s begin with this interesting fun fact. Did you know that Forex trading is a global activity that involves buying and selling currencies across different time zones and markets?

The forex market is open 24 hours a day, five days a week, from Monday to Friday. However, not all hours are equally suitable for trading, as some sessions offer more liquidity, volatility, and opportunities than others.

In this article, we will explain the main characteristics of the four major forex trading sessions: Sydney, Tokyo, London, and New York.

We will also provide some tips on how to adjust your trading strategy according to the session you are trading in.

a). Sydney Session

The Sydney session is the first to open the forex market after the weekend break. It runs from 5 p.m. to 2 a.m. EST (10 p.m. to 7 a.m. GMT).

Fun fact: the Sydney session is mainly dominated by the Australian dollar (AUD), which accounts for about 7% of the global forex turnover.

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The AUD is often influenced by the economic and political developments in Australia, as well as by the commodity prices, especially gold and iron ore.

Tell you what, the Sydney session is usually considered to be a low-volatility session, as most of the major currency pairs tend to trade in narrow ranges. However, there are some exceptions, such as the AUD/USD and NZD/USD pairs, which can experience significant movements during this session. These pairs are also known as the “Aussie” and the “Kiwi”, respectively.

Lest I forget, the Sydney session overlaps with the Tokyo session for two hours, from 7 p.m. to 9 p.m. EST (12 a.m. to 2 a.m. GMT). This is when the liquidity and volatility in the Asian market increase, as traders from both Australia and Japan are active.

b). Tokyo Session

The Tokyo session is the second to open the forex market and runs from 7 p.m. to 4 a.m. EST (12 a.m. to 9 a.m. GMT).

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It is mainly dominated by the Japanese yen (JPY), which accounts for about 17% of the global forex turnover.

The JPY is often influenced by the economic and monetary policies of the Bank of Japan (BOJ), as well as by the risk sentiment in the global markets.

Considerably, the Asian session is a medium-volatility session, as some of the major currency pairs tend to trade with moderate fluctuations.

However, not all pairs in this session experience medium movements.

There are some exceptions, such as the USD/JPY and EUR/JPY pairs, which can experience significant movements during this session. These pairs are also known as the “Dollar-Yen” and the “Euro-Yen”, respectively.

To ensure that the Forex market never stops, the Tokyo session overlaps with the London session for three hours, from 3 a.m. to 6 a.m. EST (8 a.m. to 11 a.m. GMT). This is when the liquidity and volatility in the European market increase, as traders from both Japan and Europe are active.

c). London Session

The London session is the third to open the forex market and runs from 3 a.m. to noon EST (8 a.m. to 5 p.m. GMT).

This session is mainly dominated by the British pound (GBP), which accounts for about 13% of the global forex turnover.

The GBP is often influenced by the economic and political developments in the United Kingdom, as well as by the Brexit negotiations and outcomes.

The London session is usually considered to be a high-volatility session, as most of the major currency pairs tend to trade with large fluctuations.

This is because London is the largest and most influential financial center in the world, attracting traders from all over the globe. Some of the most popular currency pairs during this session are GBP/USD, EUR/USD, USD/CHF, and USD/CAD.

The London session overlaps with the New York session for four hours, from 8 a.m. to noon EST (1 p.m. to 5 p.m. GMT).

This is when the liquidity and volatility in the American market increase, as traders from both Europe and North America are active.

d). New York Session

The New York session is the last to open the forex market and runs from 8 a.m. to 5 p.m. EST (1 p.m. to 10 p.m. GMT).

The New York session is mainly dominated by the U.S. dollar (USD), which accounts for about 88% of the global forex turnover.

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The USD is often influenced by the economic and monetary policies of the Federal Reserve (Fed), as well as by the major news releases and events in the United States.

The New York session is usually considered to be a high-volatility session, as most of the major currency pairs tend to trade with large fluctuations. This is because New York is also a major financial center in the world, attracting traders from all over the globe.

Some of the most popular currency pairs during this session are EUR/USD, GBP/USD, USD/JPY, and USD/CHF.

To ensure that the Forex market never stops, the New York session overlaps with the Sydney session for one hour, from 5 p.m. to 6 p.m. EST (10 p.m. to 11 p.m. GMT). T

his is when the liquidity and volatility in the Australian market increase, as traders from both North America and Australia are active.

How to Trade Different Forex Sessions in 2023

Knowing the characteristics of different forex sessions can help you optimize your trading strategy and performance.

Here are some general tips on how to trade different forex sessions in 2023:

  • Trade during the overlapping hours of the sessions, as they offer the highest liquidity and volatility in the market.

This can increase your chances of finding profitable trading opportunities and executing your orders at favorable prices.

  • Trade according to the dominant currency of the session, as it tends to be more sensitive to the local economic and political factors.

For example, trade the AUD during the Sydney session, the JPY during the Tokyo session, the GBP during the London session, and the USD during the New York session.

  • Trade according to the market sentiment and risk appetite of the session, as they tend to affect the demand and supply of different currencies.

For example, trade risk-on currencies such as AUD, NZD, and CAD during the Sydney and Tokyo sessions, when traders are more willing to take risks.

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Trade risk-off currencies such as JPY, CHF, and USD during the London and New York sessions when traders are more cautious and seek safety.

  • Trade according to the major news releases and events of the session, as they tend to have a significant and immediate impact on the currency market.

For example, trade the GBP during the Brexit announcements, trade the USD during the Fed meetings and NFP reports, trade the EUR during the ECB meetings and CPI reports, etc.

  • Trade with caution during holidays and weekends, as they tend to reduce the liquidity and volatility in the market.
  • This can increase your exposure to price gaps, slippage, and spreads.

Conclusion: Forex Trading Sessions in 2023: When and How to Trade

Forex trading is a dynamic and exciting activity that requires a good understanding of the market conditions and timing.

By knowing when and how to trade different forex sessions in 2023, you can improve your trading performance and results.

Remember to always use a proper risk management strategy and follow your trading plan. Happy trading! Trade with XM Forex.

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