As we outlined in our what is Forex section, the Forex market is open 24 hours a day and 5 days a week. As one part of the world wakes up, the center of trading focuses around that section of the globe and slowly shifts between financial centers as the day unfolds throughout the world.
The major Forex trading sessions are outlined in the following table:
As a basic rule, you are better off trading the respective currency pair during its corresponding session. For example, AUD/USD is more likely to move during the relatively quiet Sydney session because of market-moving news releases. On the other hand, EUR/GBP probably isn’t going to experience the same types of moves during Asia as both Europe and the UK is asleep.
Now, as you can see some of the Forex trading sessions overlap one another. During these session cross-overtimes, it is seen as one of the optimal times to be trading forex as you have highly liquid market conditions where good quality moves often come. But why are they seen as good-quality moves? Shouldn't a move be a move? Well, the simple answer here is no, not all moves are good for trading.
For example, a move during the illiquid end to the New York trading session might be prone to a fake-out rather than a sustained, more predictable move. You could be much better off taking a breakout trade during the London session open when the market is at its most liquid and moves are better. On your forex sessions diagram, take note of important times such as session open and closes when major market participants might look to open or close major orders.
As with everything in forex, nothing here is set in stone. Just because a breakout happens during the relatively quiet Asian session does not mean that it will automatically be a fake-out like the textbooks may tell you.
Stay on top of forex session times and market-moving news headlines with free access to the Forex News Terminal when you fund your live forex trading account with VT Markets.