In the first part of this article, we discuss which currency pairs are the best transactions and explain the differences between major currencies, cross currencies and foreign currencies . Today’s article will continue with last week’s article; we will discuss the best trading hours for the forex market and the differences between different forex trading sessions.
Now that you have read the first part now you know which currency pairs you should focus on, why, it is important that you understand when different Forex trading sessions are, what are the differences between them, and the best trading time and date.
Indeed, the forex market is open 24 hours a day, but this does not mean that the market is active 24 hours a day and is worth trading all day. The idea is to trade when the market is most unstable, because volatility means that the market is moving, rather than making money when the market is calm and calm.
As a price action trader, you should be particularly excited about volatility because price action strategies thrive in a volatile market environment because they simply reflect the dynamics of price movements and provide you with easy-to-identify settings that allow you to take advantage of volatility.
When will various forex trading be?
24-hour foreign exchange market trading days can be divided into three main trading days:
(Note: The chart above reflects the opening period of Tokyo, ignoring the Sydney period. We include the public period of Sydney in the following description, which is one hour earlier than the Tokyo public market. All times are based on summer time in the northern hemisphere, and the Asian period opens at 4 pm ET in winter time)
• Asian trading period (including Australia and New Zealand ): The Asian trading period opens at 6:00 pm ET and ends at 4:00 AM ET in the United States
• London trading period: The London trading period opens at 3:00 AM ET and ends at 12:00 PM ET.
•New York Trading Time: New York Trading Time is open at 8:00 am ET and ends at 5:00 pm.
You will notice that there is a time window between each trading day, and the two trading days run at the same time. From 3:00 to 4:00 am ET, the Asian and London periods overlap; from 8:00 to 12:00 ET, the London and New York periods overlap.
As you may have guessed, the overlapping periods within these three trading days are when volume and volatility rise to peak levels. Between 8 a.m. and 12 p.m. ET, the trading hours in London and New York are usually the best trading hours, as this is the time when the two most active trading centers in the world cross. Many traders trade strictly according to the 4-hour time window, as this is usually a very unstable and liquid time to trade forex markets.
Asian trading hours:
Asian trading hours starts at 6:00 pm ET, trading in New Zealand and Australia is underway, and one hour later, the market opens at 7 pm ET in Tokyo. Tokyo is the financial capital of Asia; it is also worth noting that Japan is the third largest foreign exchange trading center in the world. The Japanese Yen is the third largest trading currency, accounting for about 19.0% of all Forex transactions; overall, about 21% of Forex transactions occur during Asian trading hours.
•The financial hotspots during Asian trading period include: Tokyo, Hong Kong, Singapore and Sydney.
• Liquidity is sometimes weak during Asian trading days, which is why many forex traders avoid Asian trading hours and choose to trade in London/New York trading hours. That is to say, in the Asian market, prices sometimes make strong adjustments.
•The major press releases for New Zealand, Australia, Japan and China were released during the Asian session, so during the Asian session, the New Zealand dollar , Australian dollar and Japanese yen currency pairs tend to have greater movement than other currency pairs. (China's economic policies can affect other major currencies, even if China does not allow their currencies to float on international exchange rates)
• Generally speaking, if there is a large fluctuation in London and New York markets, the Asian market will consolidation.
London trading period:
As the Asian session is approaching its end, the London trading period is about to begin. There are several major financial centers in Europe, but London has always been the center of all Forex trading. About 30% of Forex trading occurs during London trading hours.
• Since the London period is usually the most active trading period compared to the Asia and New York periods, this results in high liquidity/trading volume and lower spreads.
•The London market usually has the most unstable market conditions because a large number of transactions occur during this trading period. Remember, volatility is for price action traders because we deal with the core price data of the market, rather than the secondary indicators lagging behind the price.
•Major European news releases are mainly released during London trading hours, which means that the GBP, Euro and Swiss franc are usually the most active during London trading hours.
New York trading session:
New York trading session starts at 8:00 am ET, which is exactly when London traders come back from lunch break, which also marks the beginning of the average most active period for foreign exchange trading; 8 am to 12 pm ET.
• Between 8 am and 12 pm Eastern Time, due to the overlap of London and New York time periods, the liquidity is high.
•Most economic reports are released at the beginning of the New York trading session, as both Europe and New York are open at this time. All economic news about the US dollar and Canadian dollars will be announced during or near New York trading hours.
•About 85% of foreign exchange transactions involve US dollars, so any currency pair involving US dollars is likely to make significant adjustments during the New York trading session.
•After the European market closed, the volatility and liquidity of the New York market in the afternoon trading period flattened.
•New York closing price is very important because it marks the end of the forex trading day, so using the New York closing price chart because many people set the price action to form
at the end of the trading day What does this mean?
If you don't have a time limit, or you have a job that allows you to view charts online regularly, the best trading hours during the New York and London time period overlap are 8:00 a.m. ET to 12:00 p.m. Trading hours in London and New York are great times to do overall trading, so no matter where you live in the world, you should be able to find a time that matches your schedule.
However, you can trade successfully outside the daily chart, which is also a much easier way to trade, which means you can view the chart every day around 5pm ET or shortly after. If you use my "Settings and Forgot Forex Trading Strategy" on the daily chart, you only need to view the market once or twice a day in a short time.
Asian trading sessions have minimal volatility, so if you are looking for significant volatility that may occur, you will most likely wait until the London market starts trading around 3 a.m. ET.
is not usually worth trading on Sunday, because exchange rate is very low and no major events have occurred to drive the pair to run. According to the "main" average daily trading range, the best trading days are Tuesday, Wednesday, Thursday, and Friday, and can also be traded before the closing of London stock markets around 12 p.m. ET. The average trading range of major banks on Monday is usually lower, but that doesn't mean you should avoid trading on Monday, it just means that statistically, the likelihood of a large fluctuation of foreign exchange prices on Monday is smaller than other working days.
Remember, being a price action trader means you need to focus most of your attention on learning to find high probability of price action trading in the forex market. Ultimately, what is really important is to get high-quality forex trading education in price behavior analysis so that you don't have to analyze economic reports and the thousands of variables that affect the price fluctuations of forex every day.
