Financial transactions are cleared based on a specific system that the whole world respects. For example, one person from Europe cannot buy a house in Japan and pay with Euro for it. The process works as follows: By far the most important financial centre in the world is London, with the City clearing billions and billions of dollars in financial transactions each and every day.
Based on this classification, there are three trading sessions that should be taken into account when trading financial markets. There are three trading sessions on each and every trading day, and their order follows the sun: The Asian, London, and the New York sessions.
The London session is by far the most important, followed by New York, and then the Asian session is the last one when it comes to the importance of the different Forex markets. As mentioned earlier, this is the key trading session in a trading day, and most of the time the close of the London session brings volatility down, and ranges start to dominate markets.
Important economic events in the Eurozone and the United Kingdom make the London session a volatile one, and this is especially true when the New York session starts.
For a few hours, the two trading sessions are overlapping and this makes for the most active trading times in a trading day. This is when moves are being made, fortunes are made and lost, and trends resume or start. Scalping is not recommended in the London session, as prices move quite a lot. Because of this, swing trading or even investing for the long term should do the trick for profitable trading.
This trading session starts with a bang, as right after the opening, important economic releases from the United States impact on prices. After the New York session has started and the London fix is over, there is little to do but watch the US equity markets, as these are clearly correlated with the Forex market. Again, using an oscillator to find out overbought and oversold areas should do the trick for profitable trading, as well as trading based on bullish or bearish divergences on these shorter timeframes.
The Asian session is usually governed by algorithmic trading, as before settling down for the day, London and New York traders instruct robots to buy or sell on breaks. All in all, what is worth remembering from this article is that Forex trading goes on around the clock, with new trends starting most likely during the London or the New York sessions when the most important economic news is scheduled to be released.
Forex Trading Sessions and Their Characteristics There are three trading sessions on each and every trading day, and their order follows the sun: Other educational materials What is Forex Trading? What is a Currency Pair?
Majors and Crosses — How to Trade Them? Journal of Financial Economics 77, no. Utilizing artificial neural networks and genetic algorithms to build an algo-trading model for intra-day foreign exchange speculation. Mathematical and Computer Modelling Evans, C. Was the information useful? Trading Sessions in Forex. Get the latest Forex updates now!
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