A forex trading session refers to a specific time period when a financial center (i.e., Sydney, Tokyo, London, or New York) is open and actively trading. Each forex session typically coincides around the usual daily business operations of the region where it is based. For instance, the London forex trading session, which operates from 8 AM to 5 PM UTC, aligns with the city’s daily business hours.
Four Types of Forex Trading Sessions:
| Forex Trading Sessions | Universal Time Coordinated (UTC) | Central European Time (CET) | Eastern Standard Time (EST) |
|---|---|---|---|
| 1. Sydney Session | 10 PM to 7 AM UTC | 11 PM to 8 AM CET | 5 PM to 2 AM EST |
| 2. Tokyo Session | 12 AM to 9 AM UTC | 1 AM to 10 AM CET | 7 PM to 4 AM EST |
| 3. London Session | 8 AM to 5 PM UTC | 9 AM to 6 PM CET | 3 AM to 12 PM EST |
| 4. New York Session | 1 PM to 10 PM UTC | 2 PM to 11 PM CET | 8 AM to 5 PM EST |
Types of Forex Trading Sessions: A Detailed Look
The forex market operates 24 hours a day, five days a week (Monday to Friday), and is divided into four main sessions, which we have broken down in more detail below:
1. Sydney Session
Session Open: 10:00 PM UTC
Session Close: 7:00 AM UTC
Session Overlap: 12:00 AM to 7:00 AM UTC with the Tokyo session
Due to its location and time zone, the Sydney session is the first to open after the weekend, it then sets the tone for the following three sessions. Relatively speaking, it typically also has the lowest trading volume (particularly in the first hours) among the four sessions, making it the “quietest.”
During the Sydney session, currency pairs involving the Australian Dollar (AUD), New Zealand Dollar (NZD), and Japanese Yen (JPY) are typically the most actively traded.
2. Tokyo Session
Session Open: 12:00 AM UTC
Session Close: 9:00 AM UTC
Session Overlaps: 12:00 AM to 7:00 AM UTC with the Sydney session; 8:00 AM to 9:00 AM UTC with the London session
The Tokyo session is the second to open after the Sydney session. Together, they are simply commonly referred to as the “Asian session,” as major Asian financial centers—such as Singapore, Hong Kong, and Shanghai—operate during this period.
The Tokyo session is more active than the Sydney session but generally less liquid than the London and New York sessions. During this period, currency pairs involving the Japanese Yen, as well as other Asian currencies, experience elevated levels of trading volume, making them much more liquid.
3. London Session
Session Open: 8:00 AM UTC
Session Close: 5:00 PM UTC
Session Overlaps: 8:00 AM to 9:00 AM UTC with the London session; 1:00 PM to 5:00 PM UTC with the New York session
The London session is arguably the most prominent of the four trading sessions, as it accounts for roughly a third of the entire forex market’s total trading volume on any given day. Hence, making it the biggest and most liquid trading session. The London session is also referred to as the “European session.”
A major reason for this is its strategic time zone, which overlaps with both the Tokyo session in its opening hour and the New York session in its later hours until its close. Due to this, most major currency pairs (i.e., those involving the Euro, US Dollar, and Japanese Yen) are highly traded.
4. New York Session
Session Open: 1:00 PM UTC
Session Close: 10:00 PM UTC
Session Overlap: 1:00 PM to 5:00 PM UTC with the London session
Finally, the New York session is the last session of the day and accounts for roughly 20% to 25% of the forex market’s total trading volume on any given day, making it the second-largest trading session behind the London session. The New York session is also referred to as the “North American session.”
During this session, currency pairs involving the US Dollar—particularly those paired with the Euro, Japanese Yen, and British Pound—are highly traded. In fact, the USD is involved in approximately 85% to 90% of all forex transactions worldwide on any given day.
The Most Active Forex Trading Sessions/Periods
The most active trading periods (i.e., those with the highest trading volume and liquidity) occur during session overlaps—when two Forex Trading sessions are open simultaneously. These session overlaps are:
1. Sydney and Tokyo Sessions Overlap: From 12:00 AM to 7:00 AM UTC
2. Tokyo and London Sessions Overlap: From 8:00 AM to 9:00 AM UTC
3. London and New York Sessions Overlap: From 1:00 PM to 5:00 PM UTC
Nevertheless, while these three session overlaps create heightened trading activity, the London and New York overlap from 1 PM to 5 PM UTC is notably the most active period of the day. During this time, market volatility and liquidity peak.
Why You Should Trade During Active Trading Periods
Prioritizing trading during the most active periods (i.e., during session overlaps) offers several key advantages. Here are the three most noteworthy:
- Highest Liquidity
- Heightened Volatility
- Analysis Reliability
1. Offers the highest Liquidity
Active trading periods, especially during the overlap of London and New York sessions, boost liquidity levels. This then results in a much faster trade execution as your orders can be filled quickly (even instantly), reducing the risk of slippage. Also, you can expect much tighter spreads, further minimizing your trading costs.
2. Heightened Volatility Level
When trading activity is elevated, volatility levels also tend to pick up. This means we can generally expect more significant price fluctuations (swings)—boosting upside potential. Additionally, higher volatility naturally creates more trading opportunities and potentially greater profit potential overall.
3. Stronger Technical Analysis Reliability
Technical analysis tends to be more reliable during periods of high market activity. This is because, at its core, technical analysis studies crowd behavior, and during active trading periods, price action tends to be more stable—and patterns more reliable—due to higher liquidity and participation from market participants (i.e., institutional and retail traders).
Which Forex Session Has the Biggest Trading Volume?
Among the four forex trading sessions, the London session has by far the biggest trading volume, accounting for roughly a third of the entire forex market’s total trading volume on any given day. Thus, making it the most liquid session, particularly during its overlap with the New York session from 1 PM to 5 PM UTC.
Use WR Trading’s Forex Market Hours Converter to Calculate the Time Zone
For a seamless and hassle-free conversion of market hours for any of the four forex trading sessions (Sydney, Tokyo, London, or New York) to your specific time zone, you can access our free Forex market hours converter at https://wrtrading.com/.
When Is the Highest Trading Volume During a Forex Session?
Generally, for the 4 forex trading sessions, trading volume spikes during their respective opening and closing hours, when a sudden major news event breaks out, and, of course, during their respective overlaps with another session—the last one being usually the most substantial. With that said, here are the key overlap time periods to watch when trading a particular session:
1. Sydney and Tokyo Sessions (Early Peak)
First, the Sydney and Tokyo sessions overlap from 12:00 AM to 7:00 AM UTC, resulting in a heightened trading volume early in the day.
2. Tokyo and London Sessions Overlap (Mid Peak)
Second, Tokyo and London sessions overlap from 8:00 AM to 9:00 AM UTC, presenting a short elevated trading period mid-day.
3. London and New York Sessions Overlap (Highest Peak)
Finally, London and New York sessions overlap from 1:00 PM to 5:00 PM UTC, making the final peak and typically also registering the highest market activity during any given day.
When Is the Lowest Trading Volume During a Forex Session?
Colloquially, trading volume generally thins out around or close to the “lunch” period in the particular timezone where the session is located. To be more precise, trading volume during non-overlapping session periods usually experiences low levels of market activity overall.
1. Sydney Session
For the Sydney session, this low market activity usually occurs from 10 PM to 12 AM UTC, just before its overlap with the Tokyo session.
2. Tokyo Session
For the Tokyo session, the lowest trading activity usually occurs from 7 AM to 8 AM, just before its overlap with the London session.
3. London Session
Relatively speaking, the London session maintains an elevated level of market activity all throughout. This is due to the fact that it is the biggest and most liquid session to begin with. That said, around 11 AM to just before 1 PM UTC (lunch period), the London session sees a dip in market activity before it eventually picks up again during its session overlap with New York.
4. New York Session
After its overlap with the London session (1 PM to 5 PM UTC), the session’s trading activity begins to thin out until its eventual closing at 10 PM UTC.
Conclusion
Choosing the right trading session can make a significant difference in your trading. It’s certainly worth paying attention to high-volume trading sessions, such as the overlap between the London and New York sessions. These are where traders experience the highest levels of liquidity and volatility.
FAQ: Most Frequently Asked Questions on Trading Sessions
Which is the best Trading Session?
That depends on which currencies you want to trade. For the major pair EUR/USD, the New York session is particularly suitable.
Can I trade in every trading session?
Yes. However, it makes sense to prefer those currencies that are currently traded more actively in the trading session.
Why is knowledge of a trading session important?
Because, on the one hand, the spread can determine which currency pair is preferable. Furthermore, trading makes more sense in liquid and volatile trading sessions.
