A significant advantage in forex trading is the ability to trade for twenty four hours each day throughout the week. However, the trading day consists of multiple trading sessions: the European session, American session and the Asian session – also known as the London, New York and Tokyo or Sydney sessions. This is because there is no single exchange in the forex market and different countries trade at different times.
When the traders in London have stopped trading for the day, the traders in New York continue. When the traders in New York stop trading for the day, then the traders in Sydney begin
Different trading sessions have unique characteristics
Each of these trading sessions are driven by the economies that are active and so each session has unique characteristics to them. There isn't necessarily a "best" time to trade forex
When certain countries are open for business, that country’s currency and the currency of their trading partners are likely to be traded in greater volume.
For example, in the Asian session, the companies in Japan are open and will be buying and selling currencies in order to do business with companies in other countries. There will be a high volume of yen being exchanged with the domestic currencies of the corporations that Japanese firms do business with.
When Europe’s businesses are open, then the euro is likely to be traded in higher volume, due to businesses in Europe trading with companies in other countries. At night, when their businesses are closed, they do not trade with other businesses outside of Europe and the trading activity of the euro is going to be lower.
Therefore, whichever session is open, the countries that are trading at the time will directly correlate with the currencies being traded. This means that each trading session will be slightly different in terms of the activity of certain currency pairs, the market volume and volatility.
Forex trading sessions
Strictly speaking, there are no open sessions on the weekend. Trading starts when the Sydney session opens at the beginning of the week and finishes when the New York session closes at the end of the week. However, your location in the world will depend on what time and day this is. If you are trading in Japan, the trading week starts on Monday morning. However, if you are in the UK, this will actually be on Sunday evening.
The following table shows the trading sessions throughout the world according to GMT. You can see from the table, that the trading day starts with the Asian session (Sydney) at 22:00 GMT and closes at the New York session at the same time – 22:00 GMT
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