As we had discussed earlier, one of the primary advantage of the Forex Market over the Stock Market is that the former is opened 24 hours for 5 days working week.
The traders get the unique opportunity to place a trade order whenever they like during the working week and take a break from trading during the weekends.
That being said, the liquidity and the market trends do not remain static throughout the 24 hours period. While some trading hours are full of movements and energy, others are more lethargic where the market moves at a sluggish pace.
While the Forex Market is open for business throughout the day, and there is no restriction as to when a trader can open a position, but it is virtually an impossible task sit in front of the screen for the whole of 24 hours.
Many traders make the major mistake of sleeping during the active hours when the Forex Market is the most energetic and remain active when the market is moving sluggishly.
The first thing you need to know is that you don’t have to be physically present in front of the screen when the market is seemingly active. Here is where the end of the day strategies come into play and takes care of the problem.
For the ease of trading, the 24 hour day period is further segmented into three primary trading sessions: The Asian, London and New York sessions.
The Asian Session
Officially, the Asian markets start simultaneously as the Sydney market opens. The market moves quite sluggishly during these few hours with only rare fluctuations in the market prices.
The Tokyo exchange opens after 3 hours of opening of the Sydney market. This is when the Asian market actually kicks into action.
The Asian market is of considerable importance with Japan being the third largest trading center across the globe. Hence, it comes as no surprise that the Japanese Yen books its place as the third most traded currency in the world.
Traders might find trading in the Asian session to be quite monotonous since the market rarely undergoes any fluctuations during this time. However, in my advanced Bank Manipulation Trading course, you can see how to use the Asian session to your benefit. The movements during this time can be used to tack and predict what direction the market will take during the later, more eventful hours.
During the Asian session, the Asian economy is the most active. That is why the release of any major economic or political news can have a significant effect on the market. These are, in fact, the main propelling forces in the Asian session during an otherwise slow-paced period.
The Asian news about political situations and economic announcements like interest rate and employment figures have an effect on all Asian countries during the Asian session.
Japan, Australia, China, New York, Hong Kong and Singapore are the most mobile economies and have the largest impact during the Asian session.
The London Session
Most traders believe that the day in the Forex market actually starts as the opening bells toll in the London market. Being the Forex capital owing to the strategic location, London is the destination where most of the Forex accounts are located.
Of the three trading sessions, the London session sees most of the trading activities. This is the time when you want to open a long or short position because the liquidity is very high and the market is at the peak of volatility. The broker spread prices are also very during this session.
Two hours prior to the opening of the London market opening, the official “European session” begins when Germany and France open their gate for the day. However, most traders wait for the London session because that is when most of the action takes place.
It is during this time when most of the big players enter the market. You can slowly get an idea of which direction the market will move during the London session.
Which Pairs Should You Trade During the London Session?
A simple answer to that question is – every one of them. That being said, maintain caution while dealing with GBP, EUR, and CHF because these are the most volatile during the London session.
The Forex market comes to life during the London session. The chart sees fluctuations in all currency pairs. Most Forex traders will use their Forex trading strategies during this time window to fetch the maximum returns from their trading activities.
The New York Session
America is the next country where the traders look to. New York City is the financial center of America. This period is known as the New York Forex Trading Session instead of the American Session.
The economic and political news released during the New York has a profound impact on the valuation of the US Dollar.
In the last chapter, I had already mentioned that USD makes up about 85% of all Forex trades. Hence, any change in the prices of the USD can have a ripple-like effect on the rates of all other currencies and has a massive impact on the Forex Market as a whole.
The New York Forex session also witnesses the Canadian Dollar entering the market as the Canadian economy also comes “online”.
Chicago Mercantile Exchange moderates the currency and commodity futures which comes online exactly one hour after the start of the New York session and marks an important event in the day of a Forex trader.
This is the perfect opportunity to trade commodities like Gold, Silver and Crude oil.
Overlap Between the London and New York Session
The Asian session closes a few hours before the start of the New York Session. However, the London session still has a few hours left to go when the New York Session opens.
So, there is a coincidence or overlap period with the last few hours the London session and the initial hours of the New York session.
This is the time window that bears the most fruits for the Forex traders. The market reaches its peak and the price movements are high.
The traders keep their eyes out for the time when these two financial stalwarts in the world are open because of the massive opportunities that they provide.
With the closure of the London Session, most of the activities in the Forex market comes to a halt. The last few hours of the New York session is quite mundane. However, the release of any major news headline can pump some life back to the dying market in those last few hours and can produce some last-minute volatility.
As the New York session closes for the day, the market activity comes to a complete halt until the next day when the Sydney open kicks off the Asian session.
This cycle of the Forex market continues daily without any falter. The market is closed on the weekends and the cycle begins again on Monday morning Sydney time when it is still Sunday in other parts of the world.
Which is the Most Lucrative Session to Trade In?
Every trader has their own preference for the best trading session to open a position. I recommend using the Daily time frame. The whole 24 hours worth of ‘Forex” period containing the whole day’s data can be summed up in a single candlestick. The traders can make high returns with low risk by reading the trends of the daily chart.
Take a look at the Trading Studio that would give you an exclusive to my Bank Manipulation Trading Strategy. With expert tips on Asian breakout strategy, breakout trap and reverse trade and a number of other equally important strategies, you can look forward to mastering Forex trade in no time.
In the next chapter, I will tell you everything you need to know about the Japanese candlesticks that took the Forex market by a storm.