The time period when banks trade actively is known as trading session. As it is well known, working hours for Forex trading is unlimited and it can be done round the clock. When trading closes in one part of the world, it begins in another or partially superimpose on another. In this way, the traders get the opportunity of trading whenever convenient to them. Hence Forex working is available to you at any time except Saturday and Sunday, when this market remains closed all over the world. Likewise it remains closed on holidays such as Christmas, Easter and New Year.
Knowledge of Forex trading sessions is also useful because different currencies behave differently in different trading sessions. For example, yen begins to move actively during the Asian session but Euro becomes more active during the European session. Sharp movement for these currencies is unusual at other times. American session is a most aggressive session which can either drop down significantly or strengthen its dollar.
Forex is considered to work according to universal time because it employs a large number of countries from different time zones. At present UTC – coordinated universal time is accepted instead of GMT standard. During the Asia Forex trading hours the most active deals are Australian dollar against the US dollar ( AUD/USD), the US dollar against the euro (EUR/USD), the euro against the yen (EUR/JPY) and US dollar against the yen (USD/JPY).
During Europe online trading hours the trades are done in financial markets of Europe. The most popular currency pair becomes much volatile when the trading session starts in London. Trading activity slows down for dinner but the players become active again at night. Price movement during these hours could be significant because most of the financial stock is concentrated in Europe.
Activity in the Forex market reaches at the peak level when the currency trading session starts in New York and the US banks start to work, at this time European dealers also come back after their lunch break. Since the influence of American banks is similar to the European banks, therefore no significant changes take place in the currency market as compared to the starting of the European session. But the volatility becomes higher after the termination of the European market. This higher volatility is often observed on Friday before the weekend. It has been noticed that the Forex trading is more aggressive in American session than the other sessions.
In short, the most active hours for currency trading are between 8:00GMT (opening time of London market) and 22:00 GMT (closing time of market in the US). The busiest time in the foreign exchange market is the overlapping time of the US and London market i.e. between 13:00 GMT to 16:00 GMT. These are the most liquid hours of the market or this is the time when maximum traders take part in currency exchange. If you are a day trader then these are the best hours for you.
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