For a trader, one of the most important steps they need to do is acquire knowledge that will help them trade wisely. It’s also important to diversify your portfolio because if one asset falls, the profits from the rest will cover the losses. We, at CM Trading, believe that time can have a major influence on your trading so you need to consider it more closely.
While it’s often said that the forex market is always open, that doesn’t necessarily mean you can trade at any time of the day with a large amount of liquidity. The best time to trade is when the majority of the world’s traders are awake and preforming trades in the global financial capitals.
This means that there are three major sessions and a small Pacific Time zone when there is good market liquidity. These sessions, named either for the zones they represent (Europe, North America, Asia) or more colloquially the major trading cities within them (Tokyo, London and New York) mimic the times the major trading centers are online.
The Sydney Forex trading zone runs from 9:30 PM to 6:30 AM - GMT. During these hours the Pacific markets are the most active. This time zone is also the smallest and least liquid of the sessions.
This session is sometimes referred to as the Asian session, as Tokyo is the financial heart of the Asian markets. It runs from 11:30 PM to 8:30 AM - GMT.
This forex trading session runs from 8:00 AM to 4:30 PM - GMT daily. About 30% of forex transactions run daily align with this session, and London is widely regarded as the financial capital of the world.
This zone represents North American business. It runs from 12:30 PM to 21:30 PM - GMT daily
The highest liquidity in forex trading occurs during the crossover points of the London and New York sessions, so for a beginner trader this is the best time to trade. There is a noted lull in the liquidity of the markets between the close of the North American (NYC) session and the opening of the Asian markets again, simply due to the time zones and business activity within them. If you live in a time zone that overlaps strongly with any of these sessions, you should consider trading within that time for maximum convenience. In addition to that, you should concentrate on currency pairs that are most active during that time. You’ll notice that there’s a lot of overlap between most of the sessions, so you’ll always have access to a decent spread of transactions no matter what time you favor for trade.
Knowing the basics of the forex market, like what is the most active trading session, is a critical part of becoming a pro forex trader. CM trading highly recommends taking the time to get familiar with the trading conditions around your favorite currency pairs.