Characteristics of the 3 Major Forex Market Sessions: Asia, Europe and USA Forex Market Sessions
Asian Market Session
During the Asian market forex session only 8 % of total daily forex trade transactions go through Tokyo trading desks. This is the least active market session of the three major forex market sessions. Most of this 8% only involves yen based currency pairs with very little trade transactions happening for other currency pairs. This is the reason why it's not suitable to trade during this Asian forex market session period. Not trading this Asian forex market session period will save you a lot of time and money.
European Market Session
The London/European market session takes the lion's share of the total forex trade transactions, 34% of all forex trade transactions are carried out during this London forex market session. London time zone is also well placed in terms of business hours for both eastern and western economies, this is when there are forex market session overlaps and this results in high number of forex trade transactions during the this period. This time is most liquid and most volatile forex market session for all the currency pairs.
The Europe time zone also includes the euro zone member countries. The Euro zone has 17 members and major banks of these countries are open and there is a lot of liquidity as many forex trading transactions are being executed.
US Market Session
The US market takes up 20% of all forex trade transactions. The most active time for trading forex market is approximately from 8 am to 12 pm when both London and New York dealing desks are open. This is when there is generally the highest volatility in the forex market as it is also when the majority of the major US economic data reports announcements are released.
European and US Market Session Market Overlap
Although the forex is open 24 hours a day during the week, there are periods which have a greater volume of forex trades, thereby increasing the opportunities to make a profit.
For day traders the most productive hours are the London and the US market session overlaps and this is the peak for currency trade transactions when these two market sessions overlap and there is a large volume of forex trade transactions & the forex market is most active.
During this market session overlap a significant amount of fundamental news is released generating a lot of volatility in forex price movement and the currency prices move fast and there is plenty of opportunities to open forex trades, this London and New York market session overlap offers the best opportunity for those wanting to maximize profit when trading the forex trading market.
The best hours for forex trading, are during this market sessions overlap because the currencies really move and the moves are decisive and offer the best chance to make profits
This is also why Asian traders, will wait until afternoon to start executing their forex trade orders, this is the period that will coincide with the Europe and USA forex market sessions.
Asian investors will not open trade transactions during the Asian session time, therefore as an investor from anywhere in the world it is best stay away also during this Asian market session, after all even the hedge funds and other pro investors from Asia will avoid trading during this time and wait until afternoon when it is much easier to analyze forex price moves because of the liquidity available during the US and UK market overlaps.
Therefore to come up with the best hours to trade forex based on these three forex market sessions as shown below:
Market Hours and Market Session Overlaps - The 3 Major Forex Market Sessions: Asia, Europe & USA Market Sessions
The chart above shows the timetable of when each forex market session starts and when it ends. The chart also shows when there are forex market session overlaps and also shows the best forex trading hours based on these forex market session overlaps.
Summary:
Determine Your Forex Trading Schedule
The type of forex trader you are determines your forex trading schedule. If you don't have a lot of time to watch the forex market then a longer term trading strategy would suit you best. If on the other hand you have a lot of time to watch the forex market then you might decide to set a forex day trading schedule where you open forex trade transactions during the most active forex market hours. The above chart shows the best GMT times to be in the market - from around 800 GMT and 1800 GMT.
Determine your time frame for your trading strategy
To set up a forex trading schedule you need to determine your forex chart time frame. Try using different chart time frames until you find the most suitable and comfortable forex chart timeframe to use in accordance with your forex trading schedule.
Test your trading strategy
Test your forex strategy on a practice demo forex trading account for a period of time. Keep track of every forex trade transaction and monitor the progress of your forex trading schedule. Try to analyze what times are most profitable for your trading strategy.
Your trading strategy should be specified on the forex trading plan that you use.
To learn more about how to specify this forex trading schedule in your forex trading plan, read the tutorial about Forex Plan. This learn how to write a forex trading plan tutorial will show you an example of a trading plan template format that you can use to specify your forex trading schedule.
