While Forex is open 24/5, it is still important to understand that there are important timetables to follow depending on different currency pairs. There are, however, some pitfalls and information to be aware of when choosing which time frames to trade.

Discover in this article everything you need to know about trading sessions to, depending on the currency pairs traded, optimize your forex session. Also discover what forex is, what assets can be traded on this market, what are the different currency trading sessions and find our detailed analysis of the sessions in Tokyo, London, New York, as well as our summary of the advantages of forex trading and points of vigilance to keep in mind.

What is forex trading?

Forex trading is an activity that involves speculating on currency variations. While a stock trader will anticipate the rises and falls of the Google stock or the Amazon stock for example, a forex trader will anticipate the rises and falls of the Euro, the Yen, the US Dollar or more Swiss Franc.

Although limited by European regulations, forex trading offers the possibility of using leverage to amplify currency movements, which are usually small (0.3% to 0.5%) in comparison. with the volatility of stocks (on average 2.08% on the CAC 40 in 2023).

Forex trading can be done on different financial products such as CFDs, Futures, ETPs, Options or Turbos.

Also consult our article Forex: history of the currency market, from the origins to the present day

What can you trade via forex?

As you have understood, Forex is about currency trading. Traditionally, it involves trading one currency against another currency, which are often presented in pairs, and more rarely in the form of an index (USD Index).

The most famous currency pairs are: EUR/USD, GBP/USD, USD/JPY, USD/CHF.

More recently, currency indices have emerged that allow traders to trade a major currency against a basket of other currencies. The most famous currency indices are the Dollar Index, the Euro Index and the Yen Index.

Also see our article 12 classic mistakes not to make in forex

The different forex trading sessions

Unlike stock exchanges which have one opening time and one closing time each day, currencies trade 24 hours a day from Sunday evening to Friday evening.

However, activity in the forex market can be divided into four major forex sessions: the Sydney session, the Tokyo session, the London session (the favorite of many traders, and where there are the most exchanges), and the New York session.

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Opening and closing time charts for each trading session

Session Times (GMT+1 – Paris time)
Sydney – opening
Sydney – closure
Tokyo – opening
Tokyo – closure
9:00 am
London – opening
London – closure
New York – opening
New York – closure
1:00 p.m.
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Be careful with time changes, some countries do not change time at the same time as France and the rest of Europe.

Time change summer 2024

In the United States, the changeover to daylight saving time will take place on the night of Saturday March 9, 2024 to Sunday March 10, 2024. In Japan, there is no time change, and the next time change time in the United Kingdom will take place on Sunday March 31, 2024. As a reminder, the time change for summer time in France will take place on the night of Saturday March 30, 2024 to Sunday March 31, 2024: at 2 a.m. in the morning, it will be 3 o'clock.

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Time change winter 2024

In the United States, the transition to winter time will take place on the night of Saturday November 2, 2024 to Sunday November 3, 2024.

In the United Kingdom, the changeover to standard time will take place on Sunday October 27, 2024. At 3 a.m. it will be 2 a.m. In France and the rest of Europe, the changeover to winter time generally takes place on the last Sunday in October. So in 2024 it should also be Sunday October 27th.

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Overlapping forex session

You will notice that there is a period between each trading session where the sessions overlap. The Tokyo and London sessions overlap, and the London and New York sessions overlap. The most active period in forex is the overlap between the London and New York forex session.

Unsurprisingly, these hours are the most volatile of the forex trading day, as there is more volume when two markets are open simultaneously: more traders, more trades, more volumes.

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Average movements by currency pairs

Average percentage changes on major currency pairs during each forex trading session

Pair Tokyo London new York
EUR/USD 0.20% 0.30% 0.40%
USD/JPY 0.50% 0.60% 0.70%
AUD/JPY 0.70% 0.80% 0.90%
GBP/USD 0.10% 0.20% 0.30%
NZD/JPY 0.90% 1.00% 1.10%

You will see from reading this table that it is the European trading session (London) which offers the most movement.

Also read our article 7 tips for trading currencies and cryptocurrencies

London Session

The London session is historically the most active session in forex. Regardless of the currency, the London trading session will see the most volume and activity. This comes from the fact that historically, London has always been at the heart of commercial and financial exchanges.

London is a financial center which has also largely specialized in currencies. In the City we find the largest trading rooms for foreign exchange dealers (term which designates a forex trader) of the big banks.

Please note, these are not the hours of the London Stock Exchange (Footsie), forex traders start at 7:00 a.m.

This is the ideal session to trade currencies, as there will be more opportunities for daytraders and scalpers, narrower spreads and deeper liquidity to ensure better trade execution.

The pairs to favor during this session: EUR/USD, GBP/USD, EUR/GBP, USD/CHF.

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New York session

The New York forex session is certainly the second most important after the London session. The reason is obvious, it is Wall Street. Although this US session represents a time more suited to trading on stocks or commodities, it is no less interesting on currencies.

Indeed, it is common for operations in stocks or commodities to involve currency transactions. In addition, it is during the American session that major announcements (FED speeches) and the most important macroeconomic publications (NFP) will take place.

The New York session therefore represents a time slot rich in opportunities and volatility. Remember that the majority of Forex transactions involve the US dollar, sometimes even indirectly.

The pairs to favor during this session: EUR/USD, GBP/USD, USD/JPY, USD/CHF.

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Asian session

The third most important trading session after London and New York, it is the Asian session, or Tokyo session, which represents an important period of activity for currencies such as the Yen, the Australian Dollar, the New York Dollar. -Zealand and the Chinese Yuan.

However, it is still on the London session that the currencies of Asian countries are traded the most. The Asian session will be marked by macroeconomic publications and announcements from the BoJ (Central Bank of Japan).

As for more exotic currencies, such as the Hong Kong Dollar (HKD), the Singapore Dollar (SGD), the Thai Baht (THB), then it is definitely during the Asian session that you should trade these currencies.

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European session

Although we could have refrained from presenting a European session, the London session covering almost the same time slot, it seemed relevant to us to emphasize that the Frankfurt financial center is gaining in transaction volume since Brexit.

Indeed, even if it is still too early to say that forex is relocating, there are more and more trading rooms which have migrated to European places such as Frankfurt or Paris. This is still a young phenomenon, but it could cause London to lose its dominant position.

The impact of such a change, even if it becomes massive in the coming years, would only have a very slight impact on the functioning of forex.

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Benefits of trading forex

Currency trading amounts to speculating on the financial health of countries or geographic areas. One of the advantages of trading this type of underlying is the ease with which it will be possible to find macroeconomic information. Indeed, it is much simpler to find the right information when it comes to the GDP of the USA or Japan, than when it comes to finding the updated turnover of a company listed on the stock exchange.

Among the advantages, we can also cite narrow spreads and sometimes even the absence of commissions allowing trading styles such as scalping or automatic trading.

In addition, 24-hour access to the market will give more flexibility to individual traders, allowing them to choose a schedule that will fit their personal and professional schedule.

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Disadvantages of trading forex

The main disadvantage of forex trading is the complexity of the movements which are the result not only of speculation, but also of international capital flows. So fluctuations can sometimes seem irrational.

In addition, currencies are mainly traded in pairs on forex, this requires the trader to analyze two assets simultaneously. For EUR/USD, the trader will need to analyze the US Dollar and the Euro.

As movements on Forex are weaker than on stocks on the stock market, traders may be tempted to use too much leverage, which results in excessive risk taking.

Also read our article Algorithms to the aid of traders?

Image source: Freepik

All our information is, by nature, generic. They do not take your personal situation into account and do not in any way constitute personalized recommendations for carrying out transactions and cannot be considered a financial investment advice service, nor any incentive to buy or sell instruments. financial. The reader is solely responsible for the use of the information provided, without any recourse against the publishing company of Cafedelabourse.com being possible. The responsibility of the publishing company of Cafedelabourse.com cannot under any circumstances be engaged in the event of an error, omission or untimely investment.

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