As you probably already know, the Forex market is open 24 hours a day, which makes it impossible to track all the fluctuations in the market in real time. So it’s critical for you to know when the most volatile trading periods occur in the day. Once you find that out, you can set up your automated system to react accordingly.
Traders who use daily trading charts can simply access Forex every day at 5pm EST since that’s when the rollover period begins. But, if you’re trading on shorter time periods, it’s critical to know when you can anticipate volatility. With that in mind here’s a schedule of the most important sessions:
The Asian Session (7pm – 4am EST) – As you might expect the most frequently traded currency during the Asian Session is the Japanese yen (JPY). A good pair in this session is the JPY and the US dollar (USD). The Asian isn’t typically as volatile as the volatile as the US session or the European session, but many traders participate and have proven to be quite successful.
The European Session (2am – 12pm EST) – At ten hours long the European Session is an hour longer than the other two sessions. This factor plus the fact that the majority of the dealing desks of large banks are located in London, means that the European Session is the most active of all three sessions. You’ll also note that this session overlaps with the other two sessions which means that during this session any currency pairs in the world can be traded.
The U.S. Session (8am – 5pm EST) – Although the Asian and European Sessions have their strengths, the U.S. session is not one to be ignored. The presence of Wall Street traders and big American banks guarantees a lot of volatility and big profits can be made on most any currency pair.
The time period between 8am and 12pm EST is generally considered to be the best time to trade on Forex since it’s the only time when the two largest sessions, European and U.S. are open simultaneously. Also, the major economic announcements from governments and corporations are typically announced in this window of time.
Finally, there are quite a few traders who like to be active between 2am and 5pm EST since that time frame encompasses both the U.S. and the European Sessions.
