So, we have already looked in detail at the stock market – where and at what hours they are traded, which affects the market session. But even if you have just recently entered the world of trading, you probably know that trading is by no means limited to stocks.
Perhaps you even managed to try your hand, for example, on Forex – a decentralized foreign exchange market. This gigantic platform has its own hierarchy, where the most dynamic trading takes place on the main currency pairs.

Forex market opening hours

The Forex currency market, unlike exchanges on which shares are traded, operates around the clock, 5 days a week, only closing on weekends. The new Forex trading cycle begins on Sunday at 17:00 New York time and ends on Friday also at 17:00.

The market provides its participants around the world with opportunities to buy and sell world currencies. Roughly speaking, a regular currency exchange also acts like Forex, but there the spreads, unlike the foreign exchange market, are much larger and, accordingly, less profitable for the trader.

The secret of round-the-clock work lies in the distribution of Forex across different time zones. While night reigns in one part of the globe, bustling trade is already in full swing in another. This allows traders to monitor exchange rates almost continuously and make transactions.

It is important to note that trading conditions may vary depending on the specific trading session. Traders must take these features into account in order to make the most of the Forex opportunities.

The operation of the Forex market is based on synchronization with trading hours in each of the countries where it is represented.

Here are the main trading sessions (all times are in Eastern Standard Time (EST):

  • New York: from 8:00 to 17:00;
  • Tokyo: 19:00 to 4:00;
  • Sydney: 15:00 to 00:00;
  • London: from 3:00 to 11:00.

Main trading sessions

Although four main Forex trading periods have previously been identified, three of them tend to be the most active. These peak sessions occur during trading hours in Tokyo, London and New York, corresponding to the Asian, European and North American sessions, respectively.

Markets are characterized by maximum activity precisely at those moments when trading is taking place on these three largest financial platforms. This is explained by the fact that most banks and corporations carry out their daily operations at this time and, accordingly, the largest trading volumes are carried out.

Tokyo. After the end of the weekend, trading activity resumes on the Forex currency market, opening the Asian session. Despite the lack of official status, it is the Tokyo markets that generate the bulk of activity during this period. It is worth noting that in addition to Tokyo, other large regional centers such as Australia, China and Singapore are also actively trading at this time. However, with significant trading volume, liquidity may be limited in the Tokyo session, especially compared to the later London and New York sessions.

London. After the end of the Asian Forex session, the baton for maintaining the activity of the foreign exchange market is taken over by the European session. This time zone covers many key financial markets, with high trading density. However, it is London that is assigned the role of the center of the European session.

London owes much of its status as the center of global Forex trading to its privileged time zone, ahead of not only other European sites, but also markets in other regions. The London session coincides in time with two other peak periods of Forex trading – Tokyo and New York. This means that it is during this period of time that the majority of daily transactions in the foreign exchange market take place.

Increased activity results in high liquidity throughout the session and lower spreads. An additional consequence of this activity is that the London session is the most volatile period in Forex. Volatility tends to decline mid-session before rising again after the New York open.

NY. By the time the North American Forex session opens, Asian markets have already completed their work, and for European traders this is only the middle of the trading day. The dynamics of the session are significantly influenced by activity in the United States, as well as the participation of Canada, Mexico and a number of South American countries. The morning hours are characterized by periods of high liquidity and volatility, which tend to subside in the afternoon when European traders wrap up their work.

Most popular currencies

In fact, any currency can be traded on Forex. However, we have already mentioned hierarchy above. Let’s outline it: there are seven leaders in the foreign exchange market or, in other words, seven main currencies:

  • 🇺🇸 US dollar;
  • 🇪🇺 euro;
  • 🇯🇵 Japanese yen;
  • 🇬🇧 British pound;
  • 🇦🇺 Australian dollar;
  • 🇨🇦 Canadian dollar;
  • 🇨🇭 Swiss franc.

The attractiveness of these particular currencies for traders around the world lies in their high trading volumes.

Let us recall that a currency pair is a quotation of two different currencies that makes up the exchange rate and is the object of Forex transactions. The type of currency pair is as follows: “Base Currency / Quote Currency” The base currency is always on the left, and the quote currency is on the right and expresses the price of the base currency. A trade operation means that the trader buys or sells the base currency for the quote currency.

When and which currency pairs should I trade?

EUR/USD (euro/US dollar): The undoubted leader in terms of trading volume. Low spread and average volatility make this pair a favorite among traders. Maximum activity is observed in the European and American sessions. Eurozone news is its main guide.

USD/CHF (US dollar/Swiss franc): A frequent rival of EUR/USD. The Swiss franc tends to decline in times of crisis. The pair’s peak activity occurs during the European and American sessions.

GBP/USD (British Pound/US Dollar): The high volatility of this pair attracts traders looking for big profits. UK political events and economic news are the main drivers of GBP/USD. Maximum activity occurs in the European and American sessions.

USD/JPY (US dollar/Japanese yen): The rather peculiar Japanese yen can go against other currencies. In addition, the yen has recently experienced turmoil due to changes in the policy of the Bank of Japan. The pair is most active during the Asian session.

USD/CAD (US Dollar/Canadian Dollar): A commodity currency closely linked to oil prices. A rise in oil puts pressure on the pair, and a fall pushes it up. The peak of activity is the American session.

AUD/USD (Australian dollar/US dollar) and NZD/USD (New Zealand dollar/US dollar): “Twins” of the currency world. Quite predictable, they tend to react to fluctuations in metal prices. The maximum period of activity is the Asian session.

Remember that these five currency pairs are just a small part of what Forex offers. By studying their characteristics and behavior, traders have the key to successfully trading in this exciting market.

What should you pay attention to when trading?

In the Forex currency market, each pair has its own unique character, which determines its attractiveness for traders. Three key factors – trading volume, volatility and trading cost – help assess the potential of a currency pair and choose the most appropriate trading strategy.

Trading volume is the number of transactions made with a given currency pair over a certain period. The higher the volume, the more liquid the pair is, and the smaller the spread. Peak activity for different couples occurs in different sessions:

  • USD/JPY, AUD/USD, NZD/USD: Asian session.
  • EUR/USD, USD/CHF, GBP/USD: European session.
  • USD/CAD: American session.

Volatility is the amplitude of fluctuations in the exchange rate of a currency pair over a certain time. High volatility pairs are suitable for more active and experienced traders who are ready for sharp price movements for potentially high profits. Low volatility pairs are preferred by conservative traders who value stability.

The trading cost, or spread, is the difference between the purchase price and sale price of a currency. The smaller the spread, the more profitable it is for the trader. The spreads are lowest for major currency pairs, the highest for cross pairs, and the highest for exotic pairs.

Analyzing these three factors allows traders to make an informed choice of a currency pair that suits their trading goals, strategy and risk management.

Remember: each currency pair is unique and can bring surprises, and careful study of the characteristics of the pairs and market dynamics is the key to successful Forex trading.

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