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.
The forex market opens when the opening bell of the Sydney trading session rings on a Monday and it closes as the closing bell of the New York session tolls on Friday. Throughout the entire week, forex traders are able to execute their trades practically any time since is a transition from one trading session to the next.
In a forex trading day, there are three major sessions wherein most traders are concentrated: Asian session, European session, and 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.
As for the European session, it comprises all banking hours in the European continent. This includes French banking hours, as well as Swiss market times. GBP/USD, USD/CHF, and EUR/USD are highly liquid during the European session, along with yen crosses with European currencies. During this trading session, European, British, and Swiss economic data are usually released.
Last but not least is the U.S. trading session, which includes American banking hours and Canadian market times. Dollar pairs are highly liquid during this time, as the U.S. and Canada typically report their economic data during the U.S. session. USD/CAD, GBP/USD, USD/CHF, USD/JPY are among the actively traded pairs in this 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 line with that, traders usually decide to close their positions for the day and take home their profits as a session is about to close. With that, there is a good chance to play reversals or bounces off inflection points around these times. Day traders or scalpers typically look for short-term opportunities to catch quick pips during session overlaps.
The forex market opens when the opening bell of the Sydney trading session rings on a Monday and it closes as the closing bell of the New York session tolls on Friday. Throughout the entire week, forex traders are able to execute their trades practically any time since is a transition from one trading session to the next.
In a forex trading day, there are three major sessions wherein most traders are concentrated: Asian session, European session, and 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.
As for the European session, it comprises all banking hours in the European continent. This includes French banking hours, as well as Swiss market times. GBP/USD, USD/CHF, and EUR/USD are highly liquid during the European session, along with yen crosses with European currencies. During this trading session, European, British, and Swiss economic data are usually released.
Last but not least is the U.S. trading session, which includes American banking hours and Canadian market times. Dollar pairs are highly liquid during this time, as the U.S. and Canada typically report their economic data during the U.S. session. USD/CAD, GBP/USD, USD/CHF, USD/JPY are among the actively traded pairs in this 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 line with that, traders usually decide to close their positions for the day and take home their profits as a session is about to close. With that, there is a good chance to play reversals or bounces off inflection points around these times. Day traders or scalpers typically look for short-term opportunities to catch quick pips during session overlaps.
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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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