Characteristics of the 3 Major Sessions: Asia, Europe & USA

Asian Session

During the Asian market only 8 % of total daily transactions go through Tokyo desks. This is the least active of the 3 major sessions. Most of this 8% only involves yen based xauusd with very little transactions happening for other xauusd. This is the reason why it's not suitable to trade during this period. Not trading this period will save you a lot of time & money.

European Session

The London/European market takes the lion's share of the total transactions, 34% of all transactions are carried out during this session. London time zone is also well placed in terms of business hours for both eastern and western economies, this is when there are market overlaps and this results in high number of transactions during the this period. This time is most liquid and most volatile session for all the xauusd.

The Europe time zone also includes the EUR zone member countries. The EUR zone has 17 members & major banks of these countries are open & there is a lot of liquidity as many transactions are being executed.

US Session

The US market takes up 20% of all transactions. The most active time for trading is approximately from 8 am to 12 pm when both London & New York dealing desks are open. This is when there is generally the highest volatility as it's also when the majority of the major US economic announcements are released.

European US Session Overlap

There are periods which have a greater volume of trade transactions, thereby increasing opportunities to make profit.

For day traders the most productive hours are the London and the US session overlaps and this is the peak for trades is when these two overlap when there is a large volume of transactions and the market is most active.

During this over-lap a substantial amount of economic news data is released generating a lot of price volatility & the prices move fast and there is plenty of opportunities to open trades, this over-lap offers the best market opportunity for those traders wanting to maximize profit.

The best hours for trading, are during this market over-lap because the prices really move and the moves are decisive and offer the best chance to make profits

This is also why Asian traders, Japan will wait until afternoon to start executing their orders, this is the period that will coincide with the Europe & USA market sessions.

Asian investors will not open xauusd transactions during the Asian time, therefore as an investor from anywhere else in the globe it is also best to stay away at this market time, after all even the hedge funds and other pro investors from Asia will avoid this time and wait for until afternoon when it is much easier because of the liquidity during the US and UK overlaps.

Therefore to come up with the best hours using based on these 3 marketmarket sessions as displayed below:

Market Hours and Overlaps

The chart above displays the time table of when each market session starts and when the session ends. Chart also shows when there are overlaps & also shows the best hours based on these overlaps.

Summary:

Determine Your Schedule

The type of trader you are determines your schedule. If you do not have a lot of time then a longer term strategy would suit you best. If on the other hand you've a lot of time then you might decide to set a day trading schedule where you open xauusd transactions during the most active market hours. The above chart shows the best GMT times to be in the market - from around 800 GMT and 1800 GMT.

Determine your time frame

To set up a schedule you need to determine your chart timeframe. Try using different chart timeframes until you find the most suitable and comfortable to use in accordance with your schedule.

Test your strategy

Test your strategy on a practice practice trading account for a period of time. Keep track of every transaction and monitor the progress of your schedule. Try to analyze what times are the most profitable for your trading strategy.

Your trading strategy should be specified on the trade plan that you use.

To learn & know more about how to specify this in your plan, read the tutorial about XAUUSD plan. This learn xauusd tutorial will show you an example of a format that you can use to specify your schedule.