As we outlined in our what is forex section, the forex market is open 24 hours a day and 5 days a week. As one part of the world wakes up, the centre of trading focuses around that section of the globe and slowly shifts between financial centres as the day unfolds throughout the world.
The major forex trading sessions are outlined in the following table:
|Forex Session||Open (GMT)||Close (GMT)|
|Sydney Session||9.00 PM||5.00 AM|
|Tokyo (Asian) Session||11.00 PM||7.00 AM|
|Frankfurt (European)||7.00 AM||3.00 PM|
|London Session||8.00 AM||4.00 PM|
|New York Session||1.00 PM||9.00 PM|
As a basic rule, you are better off trading the respective currency pair during its corresponding session. For example, AUD/USD is more likely to move during the relatively quiet Sydney session because of market moving news releases. On the other hand, EUR/GBP probably isn’t going to experience the same types of moves during Asia as both Europe and the UK is asleep.
Now, as you can see some of the forex trading sessions actually overlap one another. During these session cross over times, it is seen as one of the optimal times to be trading forex as you have highly liquid market conditions where good quality moves often come. But why are they seen as good quality moves? Shouldn’t a move be a move? Well the simple answer here is no, not all moves are good for trading.
For example, a move during the illiquid end to the New York trading session might be prone to a fake out rather than a sustained, more predictable move. You could be much better off taking a break out trade during the London session open when the market is at its most liquid and moves are better. On your forex sessions diagram, take note of important times such as session open and closes when major market participants might look to open or close major orders.
Download the MT4 Forex Market Sessions Indicator free here.
As with everything in forex, nothing here is actually set in stone. Just because a break out happens during the relatively quiet Asian session doesn’t mean that it will automatically be a fake-out like the textbooks may tell you.