One of the unique features of the Forex market is that it allows you to trade currencies 24 hours a day. When one session closes, another one opens. There are 3 majors Forex trading sessions: the London session, the U.S. session, and the Asian session. These sessions have different timezones and possess key characteristics. Knowing the characteristics of each session will help you to develop your trading plan or strategy.
Asian Trading Session
The Asian trading session enacts about 6 percent of the world’s Forex transactions and opens at 12:00 GMT. Because Tokyo is Asia’s financial capital, the Asian trading session is also regarded as the Tokyo session. FX transactions in this session largely happen in Japan, Hong Kong, Singapore, and Sydney.
News from Japan, New Zealand, and Australia come out during the Asian session, so it only makes sense to trade news events.
London Trading Session
The closing of the Asian session marks the opening of the London session at 8:00 GMT. Although Europe has several financial hubs, traders keep their eyes on London, thanks to its strategic location. Known as the world’s Forex capital, the London session has a 34 percent market share of the daily Forex volume.
The London session is the most volatile and most liquid session because a large number of FX transactions take place. This leads to lower transaction costs. Traders in this session tend to lock in profits at the end of the session, thus, trends can sometimes reverse.
News that comes out during the London session impacts currency pairs like the EUR/USD, GBP/USD, USD/JPY, and USD/CHF, so better stick to these majors.
U.S. Trading Session
The U.S. trading session opens at 13:00 GMT. Just like Asia and Europe, the U.S. has a financial center that traders keep their eyes on – New York. As the second largest Forex center in the world, 16 percent of Forex transactions take place during the New York session. It overlaps the European session, so there is high liquidity during the morning. Take note that about 85% involves the U.S. dollar, so watch out for U.S. economic releases during this session. The releases can potentially move the market.
Also read: Types of Forex Brokers in the Market