Did you know?
The Forex market is open 24 hours a day, 5 days a week.
Within a 24 hour period, there are different ‘trading sessions‘ in which the Forex market follows. The majority of those trading within a particular trading session are from (or in close proximity to) where that trading session is taking place.
As you can imagine, different trading sessions analyse and react differently to a set of news that may have came out within the previous trading session.
The Forex market follows 4 trading sessions, all of which are in located in different parts of the world – in different time zones.
Let’s have a look at each of these different trading sessions in more detail, below.
All times shown are relative to the UK
THE UK AND EUROPE SESSION
This session revolves around the London working day. This session opens at 08:00 and closes at 17:00.
The most traded currencies during this session are the Pound sterling, the Euro and Swiss Franc. This is because these currencies are connected to the countries that this session revolves around.
THE US AND CANADA SESSION
This session revolves around the New York working day. This session opens at 13:00 and closes at 22:00.
The most traded currencies during this session, as you have probably already guessed, are the US Dollar and the Canadian Dollar.
THE AUSTRALASIA SESSION
This session revolves around the Sydney working day. This session opens at 22:00 and closes at 07:00.
The most traded currencies during this session are the Australian Dollar and New Zealand Dollar.
THE JAPANESE SESSION
This session revolves around the Tokyo working day. This session opens at 00:00 and closes at 09:00.
The most traded currency during this session is the Japanese Yen.
All of the sessions overlap each other. This is how the Forex market has the liquidity to be able to operate 24 hours a day!
What is the best currency to trade during each trading session?
The best currency to trade during each trading session, is the currency(s) associated with the country/region of that particular trading session.
For example; during the UK and Europe session – the Pound sterling, Euro and Swiss Franc are the best currencies to trade. This is because these currencies are the most ‘actively’ traded during this time – meaning they have the largest volatility / potential for money to be made!
When is the best time to trade during a trading session?
The first hour of each session brings about the biggest volatility / potential for money to be made! At this time ‘new’ traders are reacting to out-of-hours events / trends from the previous trading session.
For example; if the Reserve Bank of Australia decreases interest rates during the Australasia Trading Session (22:00 – 07:00), perhaps when the UK session starts, the ‘new’ traders react more substantially than those trading in the previous trading session.
When is the best time to trade in a day?
The best time to trade in a day is known as the ‘prime trading time‘. The prime trading time is when the Forex market activity is at its highest.
Prime trading time is from 13:00 until 17:00. During this time, both the UK and Europe session and the United States and Canada session are open. Consequently the GBP, EUR, CHF, USD and CAD are all at their peak trading activity.
LESSON SUMMARY:
- The Forex market is open 24 hours a day, 5 days a week.
- The Forex market takes advantage of 4 different trading sessions (UK & Europe, US & Canada, Australasia, Japan).
- The first hour of each trading session brings about the biggest volatility / potential for money to be made!
- The ‘prime trading time’ is when market activity is at its highest, from 13:00 until 17:00.
