Traders usually enjoy participating in the forex market because it operates 24 hours a day for the five trading days in a week. This is possible because the exchange of currencies occurs anywhere in the world, as the market is open for trading whenever a part of the world is open for banking.
On Monday, the forex market opens as early as the Sydney market open or Tokyo trading session, and it closes when the New York trading session is over on Friday. Because of that, traders are able to open and close anytime within the week as there is a continuous transition between forex trading sessions.
The entire forex trading day can be broken down into three main sessions. These are the Asian session, the European session, and the U.S. session.
The Asian session includes the trading sessions in Australia to Asia, such as the Sydney market and Tokyo exchange. During this time, it is the Asian and Oceanic currencies that are most active and liquid. These are AUD/USD, NZD/USD, and the Japanese yen pairs. Economic reports from Australia, New Zealand, and Japan are also released during the Asian session.
Meanwhile, the European session is open when European banks are open, so this includes German banking hours to those of the United Kingdom. European pairs, such as GBP/USD, USD/CHF, and EUR/USD are very actively traded and liquid during this forex trading session. Japanese yen crosses with the British pound, euro, and Swiss franc are also generally liquid during this session. It is also during this time that the U.K., Switzerland, and euro zone print their economic reports.
Last but not least is the U.S. trading session, which includes American banking hours and Canadian market times. Dollar pairs are highly liquid during this time, as the U.S. and Canada typically report their economic data during the U.S. session. USD/CAD, GBP/USD, USD/CHF, USD/JPY are among the actively traded pairs in this session.
There are trading session overlaps between the Asian, European, and U.S. sessions. During these overlaps, one trading session is about to close shop and another trading session is just about to start. With that, traders from both sessions are actively trading, possibly booking profits ahead of the closing bell.
In this case, there is a good potential to make profits off reversals or quick bounces from support and resistance levels. This is because there are targets or stops located around those areas and traders who scalp might just decide to book their profits or losses for the day.
On Monday, the forex market opens as early as the Sydney market open or Tokyo trading session, and it closes when the New York trading session is over on Friday. Because of that, traders are able to open and close anytime within the week as there is a continuous transition between forex trading sessions.
The entire forex trading day can be broken down into three main sessions. These are the Asian session, the European session, and the U.S. session.
The Asian session includes the trading sessions in Australia to Asia, such as the Sydney market and Tokyo exchange. During this time, it is the Asian and Oceanic currencies that are most active and liquid. These are AUD/USD, NZD/USD, and the Japanese yen pairs. Economic reports from Australia, New Zealand, and Japan are also released during the Asian session.
Meanwhile, the European session is open when European banks are open, so this includes German banking hours to those of the United Kingdom. European pairs, such as GBP/USD, USD/CHF, and EUR/USD are very actively traded and liquid during this forex trading session. Japanese yen crosses with the British pound, euro, and Swiss franc are also generally liquid during this session. It is also during this time that the U.K., Switzerland, and euro zone print their economic reports.
Last but not least is the U.S. trading session, which includes American banking hours and Canadian market times. Dollar pairs are highly liquid during this time, as the U.S. and Canada typically report their economic data during the U.S. session. USD/CAD, GBP/USD, USD/CHF, USD/JPY are among the actively traded pairs in this session.
There are trading session overlaps between the Asian, European, and U.S. sessions. During these overlaps, one trading session is about to close shop and another trading session is just about to start. With that, traders from both sessions are actively trading, possibly booking profits ahead of the closing bell.
In this case, there is a good potential to make profits off reversals or quick bounces from support and resistance levels. This is because there are targets or stops located around those areas and traders who scalp might just decide to book their profits or losses for the day.
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Which among the different forex trading sessions should you trade? Take a look at these articles that explain what happens in each trading session A fantastic read.
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