First, the day is split into several sessions. The sessions are most often measure
according to EST (GMT-5) or GMT. If you're on the west coast of America, then you're
dealing with PST (GMT-8).
Below are the FOREX sessions.
Session EST GMT PST
Open Tokyo 7PM 0:00 4PM Asian Session
Tokyo Close 4AM 9:00 1AM
London Open 3AM 8:00 12AM European Session
London Close 12PM 17:00 9AM
NY Open 8AM 13:00 5AM American Session
NY Close 5PM 22:00 2PM
Sydney Open 3PM 20:00 12PM Oceania Session
Sydney Close 11PM 4:00 8PM
Traders can expect more volume during the hours when more than one session is active.
Be careful not to trade during periods of low volume. At such times, the market can
stall/consolidate for long periods, or make surprising/sudden unexpected moves. Spreads
can increase, slippage increases, and stops are more easily hit.
An active market with high volume is more efficient, and you have an improved
probability of entering and exiting a trade at the price that you want.
Generalities can be dangerous, so here are a few to get you started;
The Asian session:
Trading can sometimes be in a "narrow range". Currency pairs with the British pound
are the most active at this time: GBP/JPY, GBP/CHF.
The rates of USD/JPY, AUD/USD, NZD/USD pairs and their cross-rates too are quite active
at this time because the orders are not available in the American session allowing
smoothly flowing transactions in Asian currencies.
Traders sometimes avoid exposure on pairs containing the Euro before the opening of
the London session.
For "active" traders the most beneficial can be USD/JPY, GBP/CHF and GBP/JPY as their
wide range can provide to short-term-traders profit opportunities. The pairs like USD/JPY,
GBP/USD and USD/CHF - are a good choice as they allow the middle-term-traders and the
long-term-traders to consider a fundamental method of analysis for decision-making.
The European session:
At 8:00 - 17:00 GMT the trading session opens in London. London is one of the major
shopping centers of the world with a market share, of at least, 46 % and a trading volume
of $580 billion. The volume of the participants and their volumes of transactions render
London a most volatile session FOREX.
Traditionally at the London session, pairs including the pound and the euro are most
prominent. The Pairs USD/CHF, USD/CAD and EUR/USD are also fairly active and give the
market some revival. The pairs based on JPY, lose the appeal within the session, and
so do not attract active traders.
The American session:
The New York trading session operates from 13:00 till 22.00 GMT. The New York orders are
very liquid and account for 14 % of world volume of the transactions. In the spot-market
of the USA the majority of transactions are made between 13.00 and 17:00 GMT when the
European traders are still active. After the European session closes trade often decreases.
USD/CHF, GBP/USD, USD/CAD and EUR/USD are the most active trading pairs during the New York
session and provide the liquidity.
Attention should be paid the pairs EUR/GBP and EUR/CHF, as during the change of sessions,
their liquidity dissipates and does not increase before next day's opening of the London
session. As a result the "narrow range" market can make the fluctuations unprofitable for
the trader.
The busiest days:
The most active Forex trading week days are usually: Tuesday, Wednesday and Thursday. The
early part of the week is when traders are mostly watching and analyzing the market to
determine price direction. Fridays are traded approximately till noon EST, after that it
slows down until market closing at 5 pm EST.