Forex trading sessions are defined as periods of time when different financial centers are active. It is common for major currency pairs to exhibit varying levels of activity throughout the day. Traders should note specific times to make sure they are trading when the most liquidity and volatility is available.
During the first hour of the New York session, there is a large volume of liquidity. This is because there is a high concentration of speculators online during this time. Many investors consider the period from 8 am to noon to be the best time to trade. The US dollar is usually the leading mover in the early hours of the New York session. It is also the most volatile. This can be a positive aspect of trading in the Forex market, as the high volatility can increase profits.
The Tokyo Session is another important Forex trading session. It is also known as the Asian Session. It is the largest Forex trading session in the world. The Asian session is mainly generated by the capital markets of Tokyo. However, other financial centers contribute to the Asian trading session, including Singapore, Hong Kong, and Australia. The Asian market accounts for about 6% of the forex transactions worldwide.
The London Session is also a very important Forex trading session. This is primarily because it is the largest financial hub in Europe. Most of the world’s largest banks have dealing desks in London. It is also the main center for trading in European currencies. Traders can find low spreads and high liquidity in the London and New York sessions.
The North American Session is also a significant Forex trading session. The North American session is largely driven by the US economy. It is also influenced by Mexico and South America. This session is open when the Asian and European sessions are closed. It is open for fewer hours than the Tokyo-London crossover.
There are three main Forex trading sessions, and all of them have specific times when they are most active. This can help traders determine the best times to trade in the Forex market. The London and New York session overlap is one of the most active periods.
This overlap is a key Forex trading period, because it is when the most liquidity and volatility is available. During the overlap, the most popular pairs to trade are EUR/USD, GBP/USD, and USD/JPY. Other active pairs include NZD/USD, AUD/JPY, and CHF/JPY.
The Japanese Yen, the Australian dollar, and the New Zealand dollar are some of the most popular currencies during the Asian session. The Japanese Yen is particularly liquid during the morning hours. The Tokyo-London crossover has less trading volume than the London-New York crossover.
The London and New York sessions overlap for a total of eight hours. As the European and Asian markets close, the New York transactions slow. This tends to be a very slow period for trading. The last hour of the London and New York sessions is often the most volatile, so it is a good time to take advantage of that volatility