Forex Trading Sessions: Understanding the 24-Hour Market

The 24-Hour Forex Market

The forex market operates 24 hours a day, five days a week, from Sunday evening to Friday evening (US time). This continuous operation is possible because trading passes from one major financial center to another around the globe.

Unlike stock markets with defined opening and closing bells, forex trading flows continuously. However, activity levels, volatility, and liquidity vary significantly depending on which financial centers are open. Understanding these trading sessions can help you trade at optimal times.

The Four Major Trading Sessions

Sydney Session (Asian-Pacific Open)

Hours: 5:00 PM - 2:00 AM EST (10:00 PM - 7:00 AM GMT)

The Sydney session marks the start of the trading week and the beginning of the Asian trading day.

Characteristics:

• Relatively low volatility and volume
• AUD and NZD pairs see increased activity
• Often sets the initial tone for the week
• Weekend gaps may occur at market open

Best Currencies:

• AUD/USD, NZD/USD
• AUD/JPY, NZD/JPY
• AUD/NZD

Tokyo Session (Asian Session)

Hours: 7:00 PM - 4:00 AM EST (12:00 AM - 9:00 AM GMT)

The Tokyo session is the primary Asian trading session and accounts for roughly 6% of global forex volume.

Characteristics:

• Generally lower volatility than London or New York
• JPY pairs become active
• Large moves can occur on Japanese economic data
• Often sees ranging, consolidating markets
• Bank of Japan interventions can cause sudden volatility

Best Currencies:

• USD/JPY, EUR/JPY, GBP/JPY
• AUD/JPY, NZD/JPY
• Pairs involving Asian currencies

London Session (European Session)

Hours: 3:00 AM - 12:00 PM EST (8:00 AM - 5:00 PM GMT)

The London session is the most important trading session, accounting for approximately 35-40% of daily forex volume.

Characteristics:

• Highest volume and liquidity
• Major trends often start during London hours
• Tightest spreads due to high liquidity
• European economic data releases
• Overlaps with Asian close and New York open

Best Currencies:

• EUR/USD, GBP/USD, EUR/GBP
• USD/CHF, EUR/CHF
• All major pairs see good liquidity

New York Session (North American Session)

Hours: 8:00 AM - 5:00 PM EST (1:00 PM - 10:00 PM GMT)

The New York session is the second-largest trading session, representing about 20% of daily forex volume.

Characteristics:

• High liquidity, especially during London overlap
• US economic data drives major moves
• Significant activity in USD pairs
• Volatility often decreases after London closes
• Friday afternoon can see reduced activity

Best Currencies:

• All USD pairs
• USD/CAD particularly active
• CAD pairs on Canadian data releases

Session Overlaps: The Most Active Periods

London-New York Overlap (8:00 AM - 12:00 PM EST)

This four-hour window is the most active trading period in forex:

• Highest volume and liquidity of the day
• Tightest spreads
• Major price moves often occur
• Most US economic data is released
• Best time for trading most currency pairs

Asian-London Overlap (3:00 AM - 4:00 AM EST)

A brief but active period:

• Tokyo is closing, London is opening
• Can see increased volatility as traders react to Asian price action
• European early birds establishing positions

Session Trading Characteristics

Volatility by Session

Session	Volatility	Liquidity	Spreads
Sydney	Low	Low	Wider
Tokyo	Low-Medium	Medium	Moderate
London	High	Highest	Tightest
New York	High (AM), Medium (PM)	High	Tight
London-NY Overlap	Highest	Highest	Tightest

Average Pip Movements by Session (EUR/USD)

Approximate daily ranges by session (varies by market conditions):

• Asian Session: 30-50 pips
• London Session: 80-120 pips
• New York Session: 70-100 pips

Note: These are historical averages and vary significantly with market conditions.

Matching Your Strategy to Sessions

For Trend Traders

The London session often initiates daily trends:

• Wait for London open to see initial direction
• Trends that develop during London often continue into New York
• Use the overlap for maximum momentum

For Range Traders

The Asian session offers ranging opportunities:

• Price often consolidates during Tokyo hours
• Trade bounces between overnight ranges
• Be aware that London may break the range

For Breakout Traders

Session opens often provide breakout opportunities:

• London open can break Asian ranges
• New York open can extend or reverse London moves
• Monitor for breaks of overnight highs/lows

For News Traders

Align trading with data release schedules:

• Japanese data during Asian session
• European data during London session
• US data during New York session (often 8:30 AM EST)

When NOT to Trade

Low-Activity Periods

Consider avoiding trading during:

• Late New York afternoon: After London closes, liquidity drops
• Sunday market open: Thin liquidity, potential gaps
• Friday afternoon: Traders close positions for the weekend
• Holiday periods: Major holidays reduce participation

Transition Periods

The hour between New York close and Sydney open can be particularly thin:

• Spreads widen significantly
• Execution may be poor
• Random price spikes possible

Daylight Saving Time Considerations

Session times shift when countries change clocks:

Key Changes:

• The US changes clocks in March and November
• The UK and Europe change on different dates
• Australia changes at opposite times (different hemisphere)
• Japan does not use daylight saving time

Impact:

• For 2-3 weeks twice a year, overlaps shift
• Your usual trading times may have different characteristics
• Always verify session times during clock-change periods

Session-Based Trading Tips

1. Know Your Session

If you can only trade during Asian hours, focus on JPY and AUD pairs rather than forcing EUR/USD trades in thin conditions.

2. Trade Session-Appropriate Pairs

• Asian session: JPY, AUD, NZD pairs
• London session: EUR, GBP, CHF pairs
• New York session: USD, CAD pairs

3. Respect Session Opens

The first hour of each major session often sets the tone:

• Wait for the initial move to develop
• Fakeouts are common in the first 15-30 minutes
• Direction established after the first hour often continues

4. Monitor the Handoff

When one session hands off to another:

• New participants may have different views
• Positions from the prior session may be unwound
• Fresh money enters with its own bias

5. Use Session-Based Analysis

Mark session highs and lows on your chart:

• Asian session high/low often acts as support/resistance
• London session high/low is significant for New York
• Breaking session highs/lows can signal continuation

Weekly Trading Patterns

Monday

• Markets digest weekend news
• May see gaps from Friday close
• Often consolidation, setting up for the week

Tuesday - Thursday

• Most active trading days
• Major trends often develop
• Best liquidity and opportunity

Friday

• Active in the morning
• Afternoon sees position squaring
• Avoid opening new positions late Friday
• Weekend gap risk

Conclusion

Understanding forex trading sessions helps you trade at optimal times and set realistic expectations for market behavior. While forex is a 24-hour market, not all hours are created equal.

Key takeaways:

• Four main sessions: Sydney, Tokyo, London, New York
• London session has highest volume and liquidity
• London-New York overlap is the most active period
• Asian session tends to be quieter with ranging markets
• Trade currencies that match the active session
• Avoid low-liquidity periods unless you have a specific reason
• Account for daylight saving time changes
• Tuesday-Thursday typically offer best trading conditions

Align your trading schedule with the sessions that offer the best conditions for your strategy and the pairs you trade. Quality of opportunities matters more than quantity of hours spent watching charts.

Frequently Asked Questions

What is the best time to trade forex?

For most traders, the London-New York overlap (8:00 AM - 12:00 PM EST) offers the best conditions: highest liquidity, tightest spreads, and the most volatility. However, the "best" time depends on your strategy, the pairs you trade, and your personal schedule.

Can I trade forex profitably during the Asian session?

Yes, but adjust your approach. The Asian session suits range-bound strategies and trading JPY/AUD/NZD pairs. Expect smaller moves and be prepared for potential breakouts when London opens.

Why do spreads widen during certain hours?

Spreads reflect liquidity. During high-activity periods, many participants create tight markets. During low-activity periods (late New York, early Sydney), fewer participants mean less competition, so spreads widen to compensate for the higher risk market makers face.

Should I hold trades through session changes?

It depends on your strategy. Session changes can bring fresh momentum or reversals. If holding through, be aware that the new session's participants may have different views. Ensure your stop-loss can handle potential volatility at session opens.