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AB04 - What are forex trading hours or trading sessions?

"The forex markets, despite being open throughout the day still adheres to the concepts of trading session. A trading session is where one particular market is open. Due to the fact that the forex markets operate globally, depending on the geographical location, at any point, you can see one or at most two trading sessions operating. As a trader, you should have a good understanding of the forex trading sessions. This is because depending on where you are located, you would be able to easily tell which forex trading session is in effect. Depending on the trading session, the markets can behave differently. Liquidity can rise and fall and there are more news releases during certain forex trading hours compared to the others. In this article, we give you the basic concept of forex trading sessions and what are the three main forex trading sessions that you will come across."

The forex markets are unique from other markets because of the fact that they operate 24 hours a day and five days a week. Based on this, one might assume that there are no trading sessions or trading hours in the forex markets. That would be an incorrect assumption.

Just as with any other type of market, the forex markets are also divided into various trading sessions. But again, there are some significant differences in the trading hours compared to for example stocks.

When you look at the stock markets, you will primarily come across the pre-market, main trading session, and the after-hours market. With the forex markets however, the trading sessions are somewhat different.

Why should you care about the forex trading sessions?

If the forex markets operate 24 hours a day, the question is why should you as a trader care about it? The answer is that you would be able to gauge the various trading session’s uniqueness. Furthermore, understanding the forex trading sessions will give you better insights.

For example, liquidity is not evenly spread across the 24 hours in a day. Rather, the liquidity changes depending on which markets are operational and the markets that are closed. Furthermore, having an understanding of the forex trading sessions will give you the basic idea of fundamental analysis as well.

What are the main forex trading sessions?

The forex markets are divided geographically into three main trading sessions. They are:

  • The Asian trading session
  • The European trading session
  • The U.S. trading session

If you look at a 24-hour clock, then the forex trading session starts off with the Asian markets and closes into the U.S. trading session. Let’s take a look at these three main trading sessions.

The Asian trading session

The Asian trading session comprises of the Asian and Asia pacific markets. These include major trading hubs such as Sydney, Tokyo and Singapore. The Asian markets are the first to open during the day.

The Asian trading session is sometimes also referred to as the Tokyo session.

Liquidity is not that huge in this trading session. The Asian session first starts off with the open of the Australian and New Zealand markets and then moves into the Tokyo session. In terms of GMT, the Asian markets operate from 21:00 GMT through 0800 GMT.

Most of the economic news out of Asia comes out during these hours. Some of the currencies that are active during these sessions include the JPY, AUD, NZD, SGD.

The European trading session

The European trading session comprises of the European markets. This includes mainland Europe and the United Kingdom. Some of the major trading hubs in the European trading session include London, Frankfurt and other European economies such as Stockholm, Oslo, etc.

The European trading session is referred to either as the Frankfurt session or the London session. There is a one-hour time lag between Frankfurt and London.

Liquidity is quite high in the first hour of the European session as it overlaps with the final hour of trading from Tokyo.

In GMT, the European trading session operate from 0700 GMT through 1700 GMT. The European markets close an hour earlier while the London session ends at 1700 GMT.

The U.S. trading session

The U.S. trading session of course comprises of the U.S. markets. This is sometimes referred to as the NY trading session, or the New York trading session. Needless to say, liquidity is the highest during the opening hours.

This is because the U.S. trading session overlaps with the European markets for a significant amount of time.

The U.S. trading session opens at 1300 GMT through 2200 GMT. There is a one hour overlap with the early Asian session where Sydney markets are open. However, liquidity is at its thinnest at this point.

Forex Trading Sessions – Quick summary

The below table will help you to understand the forex trading sessions.

Forex Trading Session Open Close
Asian Session (Sydney) 21:00 06:00
Asian Session (Tokyo) 23:00 08:00
European Session (Frankfurt) 07:00 16:00
European Session (London) 08:00 17:00
U.S. Session (New York) 13:00 22:00

The above times are given in GMT and during DST (Daylight savings time) switched off. This is typically during the months of October through March. When DST is in effect, simply add +1 hour to the Asian markets and -1 hour to the European markets.

Read 859 times Last modified on Saturday, 25 May 2019 11:19