Characteristics of the 3 Major Market Sessions: Asia, Europe and USA Forex Market Sessions

Asia Session

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

Europe Session

The London/European market session takes the lion's share of the total trade transactions, 34% of all trade transactions are carried out during this London market 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 session overlaps and this results in high number of trade transactions during the this period. This time is most liquid and most volatile market session for all the currency pairs.

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

US Market Session

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

European and US Market Session Market Overlap

Although the forex is open 24 hours a day during the week, there are periods which have a greater volume of trades, thereby increasing the opportunities to make a profit.

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

During this market session overlap a significant amount of fundamental news is released generating a lot of volatility in price movement and the currency prices move fast and there is plenty of opportunities to open trades, this London and New York market session overlap offers the best opportunity for those wanting to maximize profit when trading the market.

The best hours for forex trading, are during this market sessions overlap because the currencies really move and the moves are decisive and offer the best chance to make profits

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

Asian investors will not open trade transactions during the Asian session time, therefore as an investor from anywhere in the world it is best stay away also during this Asian market session, after all even the hedge funds and other pro investors from Asia will avoid trading during this time and wait until afternoon when it is much easier to analyze price moves because of the liquidity available during the US and UK market overlaps.

Therefore to come up with the best hours to trade forex based on these three market sessions as shown below:

Forex Market Hours and Market Session Overlaps - The 3 Major Market Sessions: Asia, Europe and US Sessions

The chart above shows the timetable of when each market session starts and when it ends. The chart also shows when there are market session overlaps and also shows the best forex trading hours based on these market session overlaps.

Summary:

Determine Your Forex Trading Schedule

The type of trader you are determines your forex trading schedule. If you don't have a lot of time to watch the market then a longer term forex trading style would suit you best. If on the other hand you have a lot of time to watch the market then you might decide to set a day trading schedule where you open trade 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 for your trading strategy

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

Test your trading strategy

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

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

To learn more about how to specify this forex trading schedule in your forex trading plan, read the tutorial about Forex Plan. This learn how to write a forex trading plan tutorial will show you an example of a trading plan template format that you can use to specify your forex trading schedule.