More in Depth on The Three Major Session of the Forex Market

The 24 hour Forex market offers great advantage to alot of us traders as it guarantees liquidity and the opportunity to trade at any conceivable time, BUT it also has its own drawbacks. It is a fact that currency can be traded over 24 hours a day but we traders are basically human and there is no way that we can monitor the Forex market every single minute.

The inability to track the market every minute would result in missed opportunities, or even worse, when a sudden increase in volatility that will result in a move against our already open position.

As there are 3 major sessions in the Forex market, traders will have to understand the effect of the various session on the different pairs of currency so as to minimize his risk, and also the best time in which he can trade with his trading strategy/plan.

It is a fact that the Forex Market is separated into 3 sessions, namely the Asian Session (Tokyo), European Session (London) and the North America Session (New York). These 3 cities represent the 3 major financial cities for the 3 sessionsand as such their names can be used to name the 3 sessions. The Forex markets are the most active and volatile during the operation of the 3 sessions. Banks, large corporations, investment firms and individual investors look to trade mostly during these sessions.

Forex markets starts off with the Asian Session (Tokyo). When liquidity is restored to the Forex market after the weekend, Asian markets are the first to see actions. It is unofficially but a fact that activity from this part of the world is generally represented by the Tokyo capital markets, which are alive from 0000 to 0600 GMT.
It is also an important thing to keep in mind that many other countries such as Australia, New Zealand and China have strong influence on the Forex Market as well.

Due to the nature of the scattered markets, the opening and closing of the Asian session are stretched beyond the standard Tokyo hours in order to allow the different markets' activities. Therefore Asian session operating hours are often considered to be between 2300 and 0800 GMT.

The next market to open will be the European Session (London) at 0700 GMT, just before the close of the Asian market. The overlapping trading hours kept the Forex market alive. This Forex time zone is very dense and includes a lot of other major financial markets such as Germany, France, that could replace London. The official business hours for London starts at 0730 GMT and ends in 1530GMT. As explained before, due to the presence of the other markets, the London session actually run from 0700GMT to 1600GMT

Next and last to open will be the North American Session (New York). By the time it opened at 1200GMT, the Asian markets have been closed for almost 5 hours while it is only half way through for the London session. This session is the most important session of the three sessions. It is dominated with activity of the U.S. and with contributions from Canada, Mexico and of course a number of other countries in South America. This is the session with highest concentration of activites and volatilities. This is due to the early activity in financial, futures, commodity trading and the concentration of economical news releases during the North America session.

There is a big gap between the close of the U.S. market and the next opening of the Asian market at 2300 GMT. A lull in liquidity set in at the close of New York exchange at 2100 GMT (winter time) upto the time the North American session closes at 2200 GMT.