The FX market is available for trading 24/5.
Traditionally, the FX market is separated into three sessions, which overlap during the day:
- The Asian session (also referred to as the Tokyo session)
- The European session (also referred to as the London session)
- The North American session (also referred to as the New York session)
The first financial centre in the world to open for business each Monday morning is Wellington, New Zealand. When Wellington opens, it is very early morning in Asia, Sunday evening in Europe, and Sunday afternoon in North America. The Wellington opening is important because it shows how the market digests or reacts to the events that took place over the weekend.
During the Asian session, important economic data from the region is released which may have a particular effect on the European and North American sessions. A great deal of activity should be expected on USD/JPY, EUR/JPY and AUD/JPY.
The European session is especially important to traders because it coincides with the close of the Asian trading day and the first half of the North American session. During the European session, liquidity and market activity are at their highest, and economic data from the Eurozone, the United Kingdom and Switzerland cause significant price movements in EUR/USD, GBP/USD, USD/CHF, EUR/GBP and EUR/CHF.
The North American session coincides with the second half of the European session. It is by far the most active session in terms of trade volumes and price movements.
A few facts to consider when choosing the best time to trade:
- Most market activity occurs when two or more market centres are open at the same time.
- Trades have more chances of being successful when market activity is high.
- It is usually best to avoid trading when market activity is low.