When and what to trade Think about trading sessions!

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When and what to trade: Think about trading sessions!

Are you asking what and when to trade? The answer may be simpler than it sounds. The answer largely depends on the timing of your trade. So, what indicators to use, what currency pairs and assets to focus on? We have already touched this in our article Trading psychology: how often to trade and how to manage your trades, but repetition is the mother of learning, isn’t it?

Trading sessions

Trading sessions are the fundament. The Forex market is open for 24 hours a day, five days a week. Cryptocurrency market is open for 24 hours a day, each day in the week. Markets in which shares are traded are always open based on the stock exchange’s opening hours. To make it possible the main trading centers in the world open differently depending on the geographical zone (from Europe to Australia and Asia). The most famous financial centers include London, New York, Sydney, and Tokyo.

Timing of trading sessions:

  • London: 9:00–17:00 (CEST)
  • New York: 14:00–22:00 (CEST)
  • Sydney: 23:00–7:00 (CEST)
  • Tokyo: 1:00–9:00 (CEST)

Nothing is fixed. Although you are a European you can participate in trading sessions in Asia or Australia. Logically, the majority of European full-time traders copies the European session. The reason is simple: When do you think the currency pair EUR/USD will be traded most? During the crossing of the European and American sessions or, at least during one of them.

Notice that after 10 pm the trading activity of the above currency pair significantly declines. It’s because Australian and Asian traders are interested in other currencies than EUR and USD. I recommend the website ForexMarketHours to see when each session takes place.

This is how ForexMarketHours looks like

How to use trading sessions

Depending on your favorite or chosen currency pair or another asset you can assess when the pair is likely to be more or less volatile and make use of it in your trading. You can also look to the past session, which may set the direction. Many European traders in the morning before they start their work analyze the Asia trading session. Important indicators (such as Fibonacci) play a major role in it suggesting what might be the reaction during the European trading session.

The second option is the concept of initial balance, usually the first hour of a new session that is supposed to indicate in which direction the market will move. We may draw a parallel with a standard business day. If you know that your day is going to be busy you will get up early in the morning and work quickly. If your day is supposed to be less hectic you are inclined to have a slower start.

Though not being a living thing, market behaves similarly and the first hour may suggest what the next pace might be. More, you may apply Fibonacci lines, or trade for bouncing or breaking the initial balance (high and low in the first hour). These simple facts can be used for building a strong Forex trading strategy. Initial Balance is one of a few indicators than are suitable for the strategy BERSI Scalp.

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It is useful to know something about trading sessions and benefit from this knowledge to gain profit. Although not being the Holy Grail, trading sessions can serve as a good helper.

Author

More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

Trading Session

What is a Trading Session?

A trading session is a period of time that matches the primary daytime trading hours for a given locale. This phrase will refer to different hours depending on the markets and locations being discussed. Generally a single day of business in the local financial market, from that market’s opening bell to its closing bell, is the trading session that the individual investor or trader will reference. The markets for forex, futures, stocks and bonds all have different characteristics that define their respective trading sessions for a given day, and the primary trading hours naturally differ from one country to another dependent on time zones.

Key Takeaways

  • A trading session is the primary trading hours for a given asset and locale.
  • The typical session for U.S. stocks is the most clearly defined trading session.
  • The working hours of the NYSE mark the most active period for trading within a 24-hour time period.
  • Different markets may each have their own working hours.

How a Trading Session Works

Trading session hours can vary by asset class and country. The regular trading session for U.S. stocks starts at 9:30 a.m. and ends at 4:00 p.m. Eastern Time (ET) on weekdays (holidays excepted). These times are primarily driven by the working hours of the New York Stock Exchange (NYSE) which closes early at 1:00 p.m. ET on three occasions throughout the year associated with holidays.

The regular weekday trading session for the U.S. bond market is 8:00 a.m. to 5:00 p.m. ET. In 2020, the trading session is closed on 10 weekday holidays and closes early at 2:00 p.m. on six other occasions.Futures markets have different trading hours depending upon the exchange and the type of commodity traded being traded. Traders should be aware of trading session hours for any securities and derivatives that they’re interested in trading beforehand to prevent any unexpected problems from arising.

In addition to regular trading hours, some markets may have pre-market or after-hours trading sessions. Other markets even have 24-hour trading sessions.

Pre-Market and After-Hours Trading Sessions

Pre-market trading for U.S. stocks occurs between 4:00 a.m. and 9:30 a.m. ET on weekdays. After-hours trading is from 4:00 p.m. to 8:00 p.m. ET on weekdays, although these times may vary slightly by exchange.

Pre-market and after-hours trading is a compelling way to capitalize on important news announcements or other factors that come occur of regular trading hours. With that being said, here are a number of cautions investor should be mindful of when trading outside of regular hours.

The Securities and Exchange Commission notes eight risk factors:

  1. Inability to See or Act on Quotes – Some brokers only allow investors to view quotes from its own trading system rather than other ECNs.
  2. Lack of Liquidity – There are fewer traders involved with after-hours trading, so there’s typically a lot less liquidity than during regular trading sessions.
  3. Larger Quote Spreads – Less trading activity often translates to wider bid and ask spreads that could make order execution difficult.
  4. Price Volatility – There may be greater fluctuations than during regular hours, particularly if there’s a breaking news story with significant market repercussions.
  5. Uncertain Prices – The price of stocks traded after-hours may differ from those traded during regular trading sessions.
  6. Bias Toward Limit Orders – Many ECNs only accept limit orders rather than market orders during after-hours sessions.
  7. Competition with Professional Traders – Many after-hours traders are professionals with large institutions that have access to more information.
  8. Computer Delays – There is less technical support available during pre-market or after-hours trading sessions, so you could encounter trade execution delays.

24-Hour Trading Sessions

There are some markets with 24-hour trading session. Among the most notable is the global foreign exchange (forex) market, in which currencies are traded. The forex market is the largest, most liquid market in the world.

Unlike the equity market, the forex market has no physical exchange. Rather, it consists of a number of large banks and brokerage firms that trade currencies with themselves. The forex market is open 24 hours a day, five days per week, from Sunday evening until Friday night.

Forex Trading Sessions

Now that you know what forex is, why you should trade it, and who makes up the forex market, it’s about time you learned when you can trade.

It’s time to learn about the different forex trading sessions.

Yes, it is true that the forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day.

You can make money trading when the market moves up, and you can even make money when the market moves down.

BUT you will have a very difficult time trying to make money when the market doesn’t move at all.

And believe us, there will be times when the market is as still as the victims of Medusa.

This lesson will help determine when the best times of the day are to trade.

Forex Market Hours

Before looking at the best times to trade, we must look at what a 24-hour day in the forex world looks like.

The forex market can be broken up into four major trading sessions: the Sydney session, the Tokyo session, the London session, and Pipcrawler’s favorite time to trade, the New York session. Below are tables of the open and close times for each session:

Spring/Summer in the U.S. (March/April – October/November)

Local Time EDT BST (GMT+1)
Sydney Open – 7:00 AM

Sydney Close – 4:00 PM

Tokyo Open – 9:00 AM

Tokyo Close – 6:00 PM

London Open – 8:00 AM

London Close – 4:00 PM

New York Open – 8:00 AM

New York Close – 5:00 PM

Fall/Winter in the U.S. (October/November – March/April)

Local Time EST GMT
Sydney Open – 7:00 AM

Sydney Close – 4:00 PM

Tokyo Open – 9:00 AM

Tokyo Close – 6:00 PM

London Open – 8:00 AM

London Close – 4:00 PM

New York Open – 8:00 AM

New York Close – 5:00 PM

Actual open and close times are based on local business hours, with most business hours starting somewhere between 7-9 AM local time.

Open and close times will also vary during the months of October/November and March/April as some countries (like the United States, England and Australia) shift to/from daylight savings time (DST).

The day of the month that a country shifts to/from DST also varies, confusing us even more. And Japan doesn’t observe daylight savings, so thank you Japan for keeping it simple.

Now, you’re probably looking at the Sydney Open and wondering why it shifts two hours in the Eastern Timezone.

You’d think that Sydney’s Open would only move one hour when the U.S. adjusts for standard time, but remember that when the U.S. shifts one hour back, Sydney actually moves forward by one hour (seasons are opposite in Australia).

You should always remember this if you ever plan to trade during that time period.

Also take notice that in between each forex trading session, there is a period of time where two sessions are open at the same time.

During the summer, from 3:00-4:00 AM ET, for example, the Tokyo session and London session overlap, and during both summer and winter from 8:00 AM-12:00 PM ET, the London session and the New York session session overlap.

Naturally, these are the busiest times during the trading day because there is more volume when two markets are open at the same time.

This makes sense because, during those times, all the market participants are wheelin’ and dealin’, which means that more money is transferring hands.

Now let’s take a look at the average pip movement of the major currency pairs during each forex trading session.

Pair Tokyo London New York
EUR/USD 76 114 92
GBP/USD 92 127 99
USD/JPY 51 66 59
AUD/USD 77 83 81
NZD/USD 62 72 70
USD/CAD 57 96 96
USD/CHF 67 102 83
EUR/JPY 102 129 107
GBP/JPY 118 151 132
AUD/JPY 98 107 103
EUR/GBP 78 61 47
EUR/CHF 79 109 84

From the table, you will see that the London session normally provides the most movement.

Notice how some currency pairs have much larger pip movements than others.

Let’s take a more in-depth look at each of the sessions, as well as those periods when the sessions overlap.

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