the keys to optimizing your trading session

While Forex is open 24/5, it is still important to understand that there are important schedules to follow depending on different currency pairs. However, there are some pitfalls and information to be aware of when choosing which timeframes to trade.

Discover in this article everything you need to know about trading sessions to optimize your forex session depending on the currency pairs traded. Also discover what forex is, what assets can be traded in this market, what are the different forex trading sessions and find our detailed analysis of the sessions in Tokyo, London, New York, as well as our summary of the benefits of forex trading and points of vigilance to remember.

What is forex trading?

Forex trading is an activity that involves speculation in currency variations. While a stock trader will anticipate rises and falls in Google stock or Amazon stock, for example, a forex trader will anticipate rises and falls in the euro, yen, US dollar or more Swiss franc.

Although limited by European rules, forex trading allows you to use leverage to amplify currency movements, which are usually small (0.3% to 0.5%) compared to stock volatility (average 2.08% on the CAC 40 in 2023).

Forex trading can be done on various financial products such as CFDs, Futures, ETPs, Options or Turbos.

See also our article Forex: the history of the currency market, from its origins to today

What can you trade via forex?

As you have understood, Forex is about currency trading. Traditionally, it involves trading one currency against another currency, which is often presented in pairs and more rarely in the form of an index (USD Index).

The most famous currency pairs are: EUR/USD, GBP/USD, USD/JPY, USD/CHF.

More recently, currency indices have emerged that allow traders to trade a major currency against a basket of other currencies. The most well-known currency indices are the Dollar Index, the Euro Index and the Yen Index.

Also see our article 12 classic mistakes you must not make in forex

The different forex trading sessions

Unlike stock exchanges, which have one opening and one closing time each day, currencies are traded 24 hours a day from Sunday evening to Friday evening.

However, activity in the forex market can be divided into four major forex sessions: the Sydney session, the Tokyo session, the London session (the favorite of many traders and where there are the most exchanges) and the New York session.

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Opening and closing charts for each trading session

Session Times (GMT+1 – Paris time)
Sydney – opening
Sydney – closure
23:00
8:00
Tokyo – opening
Tokyo – closure
00:00
09:00
London – opening
London – closure
8:00
17:00
New York – opening
New York – closing
13:00
22:00
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Be careful with time changes, some countries do not change time at the same time as France and the rest of Europe.

Time change summer 2024

In the US, the change to DST will take place on the night of Saturday 9 March 2024 to Sunday 10 March 2024. In Japan, there is no time change and the next time change in the UK will take place on Sunday 31 March 2024. As a reminder, the time change for summer time in France will take place on the night between Saturday 30 March 2024 and Sunday 31 March 2024: at 2 in the morning it will be at 3 o’clock.

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Time change in winter 2024

In the United States, the transition to winter time will take place overnight between Saturday, November 2, 2024 and Sunday, November 3, 2024.

In the United Kingdom, the switch to standard time will take place on Sunday 27 October 2024. 3am is 2am. In France and the rest of Europe, the transition to winter time generally occurs on the last Sunday in October. So in 2024 it should also be Sunday 27 October.

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Overlapping forex session

You will notice that there is a period between each trading session where the sessions overlap. The Tokyo and London sessions overlap, and the London and New York sessions overlap. The most active period in forex is the overlap between the London and New York forex session.

Not surprisingly, these hours are the most volatile of the forex trading day, as there is more volume when two markets are open simultaneously: more traders, more trades, more volume.

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Average movements by currency pair

Average percentage changes on major currency pairs during each forex trading session

Couple Tokyo London New York
EUR/USD 0.20% 0.30% 0.40%
USD/JPY 0.50% 0.60% 0.70%
AUD/JPY 0.70% 0.80% 0.90%
GBP/USD 0.10% 0.20% 0.30%
NZD/JPY 0.90% 1.00% 1.10%

You will see by reading this table that it is the European (London) trading session that offers the most movement.

Also read our article 7 tips for trading currencies and cryptocurrencies

London session

The London session is historically the most active session in forex. Regardless of the currency, the London trading session will see the most volume and activity. This comes from the fact that historically London has always been at the heart of commercial and financial exchanges.

London is a financial center which also specializes to a large extent in currencies. In the city we find the largest trading rooms for foreign exchange traders (term that denotes a currency trader) of the major banks.

Please note that this is not the time of the London Stock Exchange (Footsie), forex traders start at 7:00.

This is the ideal session to trade forex as there will be more opportunities for day traders and scalpers, narrower spreads and deeper liquidity to ensure better trade execution.

The pairs to favor during this session: EUR/USD, GBP/USD, EUR/GBP, USD/CHF.

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New York session

The New York forex session is definitely the second most important after the London session. The reason is obvious, it’s Wall Street. Although this US session represents a time more suitable for trading stocks or commodities, it is no less interesting on currencies.

Indeed, it is common for operations in stocks or commodities to involve foreign exchange transactions. Additionally, it is during the US session that major announcements (FED speeches) and key macroeconomic publications (NFP) will take place.

The New York session therefore represents a time period rich in opportunity and volatility. Remember that the majority of Forex transactions involve the US dollar, sometimes even indirectly.

The pairs to favor during this session: EUR/USD, GBP/USD, USD/JPY, USD/CHF.

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Asian session

The third most important trading session after London and New York, it is the Asian session, or the Tokyo session, which represents an important period of activity for currencies such as the Yen, the Australian dollar, the New York dollar. – Zealand and the Chinese Yuan.

However, it is still in the London session that the currencies of the Asian countries are traded the most. The Asian session will be characterized by macroeconomic publications and announcements from the BoJ (Central Bank of Japan).

As for more exotic currencies such as Hong Kong Dollar (HKD), Singapore Dollar (SGD), Thai Baht (THB), it is definitely during the Asian session that you should trade these currencies.

Also read our article What is a carry trade?

European session

Although we could have refrained from presenting a European session, with the London session covering almost the same time frame, we felt it relevant to emphasize that Frankfurt’s financial center is gaining in transaction volume since Brexit.

In fact, although it is still too early to say that forex is moving, more and more trading rooms have migrated to European locations such as Frankfurt or Paris. This is still a young phenomenon, but it could cause London to lose its dominant position.

The impact of such a change, even if it becomes massive in the coming years, will have only a very small impact on the functioning of forex.

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Advantages of trading forex

Currency trading is similar to speculating on the economic health of countries or geographic areas. One of the advantages of trading this type of underlying is the ease with which it will be possible to find macroeconomic information. It is actually much easier to find the right information when it comes to the GDP of the US or Japan than when it comes to finding the updated revenue of a listed company.

The advantages can also include narrow spreads and sometimes even the absence of commissions that allow trading styles such as scalping or automatic trading.

In addition, 24-hour access to the market will provide more flexibility to individual traders, allowing them to choose a schedule that suits their personal and professional schedule.

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Disadvantages of trading forex

The main disadvantage of forex trading is the complexity of the movements, which are not only the result of speculation, but also of international capital flows. So fluctuations can sometimes seem irrational.

In addition, currencies are mainly traded in pairs on forex, this requires the trader to analyze two assets simultaneously. For EUR/USD, the trader must analyze the US dollar and the Euro.

Since movements in Forex are smaller than in stocks, traders may be tempted to use too much leverage, resulting in excessive risk taking.

Also read our article Algorithms to help traders?

Image source: Freepik

All of our information is generic in nature. They do not take into account your personal situation and in no way constitute personal recommendations for carrying out transactions and cannot be considered as financial investment advice or as any encouragement to buy or sell instruments. The reader is solely responsible for the use of the information provided, without the possibility of any recourse against the publisher of Cafedelabourse.com. The responsibility for the publisher of Cafedelabourse.com can under no circumstances be assumed in the event of an error, omission or untimely investment.

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