The Forex market is open 24 hours a day, 5 days a week. You can trade anytime you want throughout the week and the market is closed on the weekends from friday 4pm CST to sunday 4pm CST.
Active traders, known as Scalp Traders or Day Traders, prefer to trade in active trading periods known as sessions. Sessions are trading hours where traders often look for high liquidity in the market to make profit in a short amount of time, usually towards the beginning of a session or when a session overlaps with another. With the forex market being open most of the time, it is important to know which are the most active trading periods. If you are looking for times of large movements, that is during when sessions overlap such as the London Session overlapping the New York Session and during a major news release because the news are capable of increasing volatility on a normally slow trading period.
What Are Sessions?
Majority of trading in forex is focused in financial centers. There are many financial centers all over the world but this market can be traded in 4 major sessions; the London Session, New York Session, Tokyo Session & Sydney Session. Each session is about 9 hours. These times vary and slightly change during a specific season.
The London Session
The London Session controls essentially the movement of the European market. Roughly 30% of all market transactions take place during the London Session due to overlapping sessions with the New York Session, which leads to a massive surge in liquidity. European news that is released during this session creates volatility and major movements carry over into the New York Session.
The London Session begins at 2am CST to 11am CST. This session is primarily watched by traders who trade European pairs.
The New York Session
The New York Session is the most traded session American news that is released during this session creates volatility and typically in the beginning of the session. Every major transaction involves the US dollar so anything that is directly related to it will create a large movement. The New York Session slows down about halfway through the session. This is the last session before trading day officially ends.
The New York Session begins at 7am CST to 4pm CST. This session is primarily watched by traders who trade US pairs.
The Tokyo Session
The Tokyo Session is the third busiest financial center. The Bank of Japan has a heavy influence over the market due to the massive government printed money that are injected, should they feel the strength of their currency getting too strong. During the beginning of this session are usually the busiest due to the economic news being released. The trading volume often drops after halfway through the session.
The Tokyo Session begins at 5pm CST to 3am CST. This session is primarily watched by traders who trade Japanese pairs.
The Sydney Session
The Sydney Session is where the trading day officially begins. It is the smallest market compared to the other sessions. However, this shows a lot of initial actions when markets reopen for the week due to retail traders and financial institutions trying to regroup since the market is closed from Friday afternoons to Sunday afternoons.
The Sydney Session begins at 4pm CST to 1am CST. The pairs that are often traded during this time are the Australian Dollar (AUD) and New Zealand Dollar (NZD).