Asian, European And Us Sessions In The Currency Market
Currency markets are huge
Currency markets are huge. They are open 24 hours and currencies get traded round the clock around the different currency centers in the world. Currency markets only close for the weekend. This continous price action in the currency market confuses many new traders. Especially those who have been trading stocks in the past. They can't figure out the time when they can get the most from trading currencies.
Stock markets have fixed hours. NYSE is open for trading from 9:00 AM EST to 4:30 PM EST. You can only trade stocks on NYSE during this time. The best way to divide the 24 hours forex market is to divide it into three trading session based on the three locations from where forex gets traded heavily.
The first most important trading session in the currency market is the Asian Trading Session. It starts from 7:00 PM EST to 4:00 AM EST. Tokyo is the center of this session followed by Singapore, Hong Kong and Sydney. Most of the transaction that take place during this time involve the Japanese Yen as major import and export order require currency changing. So the heavily traded currency pairs during this time are JPYUSD, JPYGBP and JPYAUD. For those traders who trade the JPY, this is the time to be active in front of their computers.
The most important session is the European Session that takes place from 2 AM EST to 12 PM EST. London is the center during this session. London is still the center of global currency markets with heavest volume of transactions. Liquidity is high during this session and major moves get started during this time. The major pairs traded during this session are the USDEUR, USDGBP, USDCHF, EURCHF, USDJPY & GBPJPY.
The second most important trading session is the US Session that runs from 8:00 AM EST to 5:00 PM EST. New York is the second most important currency center in the world. Major investment banks, corporations, hedge funds and institutional investors have their offices located in New York. The other main center during this trading session is Chicago. Large currency transactions involving USD either as a base currency or counter currency take place during this session. These transactions have the potential of moving and shaking the global currency market. The currency pairs heavily traded during this time are UERUSD, GBPUSD, CHFUSD and CADUSD.
You must have observed that both the European Session and the US Session overlap from 8 AM EST to 12 PM EST. This is the most active part of the day in currency markets. Almost like 70% of the transactions take place during this time. Volatility is high during this time of the day. For the active traders looking for volatility in the market and wide ranges, this is the time to sit in front of their computers and trade.
Similarly, you must have observed that the Asian and the European Session overlaps from 2 AM EST to 4 AM EST. Most of the time the market is not active during this time as European Session has just started and the Asian Session is closing. During these 2 hours most of the time the market is consolidating and waiting for the activity to pick up in London.
As a trader what you need to do is break the 24 hours into three 8 hours session. Further break these 8 hours into 4 hour session and try to time these 4 hour sessions with the above trading sessions that match with the currency pair that you want to trade most!
by: Ahmad Hassam
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