This lesson will cover the following
- Characteristics of one trading day in the Forex market
- Time frame of different sessions in accordance with current time of the year
The international currency market has one distinct feature – it is open 24 hours per day and five days in a week. A single trading day in the market, however, is not dominated by one only market exchange, but engages a network of exchanges and brokers around the globe.
Every trading day is comprised by four different parts, which are usually referred to as ”trading sessions” by market players. Currency pairs are traded from Sunday afternoon EST (Eastern Standard Time) to Friday afternoon EST. This means that during the week there is always at least one financial center open for business, facilitating investors intention to enter into trades. As one market closes for the night, another opens elsewhere on the globe.
However, having four different sessions in a 24-hour day does not mean that each trading session lasts for 6 hours. These four sessions cross among themselves, or we can also say that they overlap each other.
It may be valuable if we mention that the distinction of four trading sessions is relative. For instance, when European trading session ends, this does not mean that all traders located there go to bed. This differentiation signals that trading activity in the European region is gradually reduced.
Beginner traders should also take note that during the winter period most countries have to adjust clocks for winter time. This causes a certain shift in times of different trading sessions, thus the degree of overlapping could be different, depending on time during the year.
Trading in the currency market opens in New Zealand, followed by Australia, Asia (and more precisely Japan), the Middle East, Europe (with London being the major financial center) and North America. According to data by the Bank for International Settlements, trading in London accounts for 36.7% of the total trading volume, trading in New York City accounts for 17.9%, and trading in Tokyo accounts for 6.2%.
Having in mind what the current time of the year is, we can present trading sessions as follows:
|10:00 PM||11:00 PM||12:00 AM||01:00 AM||02:00 AM||03:00 AM||04:00 AM||05:00 AM||06:00 AM||07:00 AM||08:00 AM||09:00 AM||10:00 AM||11:00 AM||12:00 PM||01:00 PM||02:00 PM||03:00 PM||04:00 PM||05:00 PM||06:00 PM||07:00 PM||08:00 PM||09:00 PM||10:00 PM|
|09:00 PM||10:00 PM||11:00 PM||12:00 AM||01:00 AM||02:00 AM||03:00 AM||04:00 AM||05:00 AM||06:00 AM||07:00 AM||08:00 AM||09:00 AM||10:00 AM||11:00 AM||12:00 PM||01:00 PM||02:00 PM||03:00 PM||04:00 PM||05:00 PM||06:00 PM||07:00 PM||08:00 PM||09:00 PM||10:00 PM|
In the table above:
EDT (Eastern Daylight Time) = UTC (Coordinated Universal Time) – 4 hours
EST (Eastern Standard Time) = UTC (Coordinated Universal Time) – 5 hours
Next, we shall talk a bit more about each of the trading sessions.