Forex Market Hours
The international nature of currency trading allows for around the clock trading. This means that is it possible for the Forex markets to be traded twenty four hours a day.
The Forex market hours are divided into multiple sessions throughout this period. Each session is identified by the predominant region of trading during the course of the session. Trading sessions become active as the major financial markets open and become active in each geographical region.
The full trading day is divided into four key sessions; the London session, the New York session, the Pacific session and the Asian session. Each is characterized by its own unique dynamic and trading behaviour.
When trading Forex, particularly breakout strategies, you need to be aware of the timing of each of these key sessions, their particular dynamics and the currency pairs which dominate the trading in each session.
Understanding the timing of the Forex hours will help you to align your trading strategies to the times when their is the greatest potential for profit.
The London Session
The London session is regarded as the key session in the trading day. It is the session where the greatest volume of transactions are made and includes not just the London, but also the opening of the European markets.With so many transactions taking place at this time liquidity in the markets is high and therefore the cost to transact during this session (spread) tends to be lower.
The volume traded often leads to daily market trends being defined during this session and it is common for trends established at this time to carry through into the subsequent New York trading session.
The New York Session
The New York session is the second largest trading session by volume. The New York Forex session opens mid way through the London session and will often see a continuation of the market trends previously set. Trading activity commonly peaks during the start and end of this session, with a drop in trading activity half way through as traders break for lunch.
The Pacific Session
The Pacific session starts when the New Zealand and Australian markets open. It is one of the quietest sessions in terms of trading volume with the majority of trading activity focusing on the major Pacific pairs (AUD/USD, NZD/USD) and regional currency crosses.
The Asian Session
Trading in the Asian session is dominated by the Tokyo (Japan) opening. During the course of this session trading volume in European based currencies tends to drop away and focus switches to the Yen pairs, in particular the USD/JPY. This quieter trading period often means that trends in the major European currency pairs (EURUSD, GBPUSD) are put on hold until the reopening of the London markets the following morning.
The increased volume and volatility at the opening of a market session makes these times ideal for implementing a breakout trading strategy that can capture the momentum of these early session moves.
London Forex Open is a Forex breakout trading strategy that aims to capture both breakouts and false breakouts that occur at the start of the London Forex Market hours.
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