Forex Trading Session
The Forex Market can be categorized into four major trading sessions:
- -The Sydney session
- -The Tokyo session
- -The London session
- -The New York session
When one can see the great volatility, liquidity, and movement in the market:
During,
- Nylon Session
- Asian Session
Nylon Session
The highest volume in trading happens during the London session (as it also has Europe as well) but liquidity is at its highest when New York opens and overlaps with the London session. This is referred to as the ‘Nylon’ session (New York and London) when liquidity and trading volume is at its highest. Therefore we can expect larger moves and is an ideal time to trade. This is a popular time for intraday traders to participate as due to the higher volume and liquidity, spreads are at their tightest so transaction costs for the traders is lower.
Asia Session
Same as New York and London, Tokyo| Hong Kong and Singapore are considered important trading centers. As London and New York banks close their official trading sessions, the Asian banks open and trade which is why Forex is seen as a 24-hour market. However the volume is not as high as the Nylon session which means we tend to see smaller price movements and wider spreads during this time.
Let us understood the difference in volatility and liquidity of market during Nylon Session and Asian Session:
—We can see that during the Asian session volume and liquidity is at its lowest and increases when Europe and London open, with the peak during the Nylon session.
Note: It is not precise to the hour or minute.
—We have understood the worst and best time to trade during the day.
Now, let us understand the worst and best time to trade in weekdays:
»Worst Case:
The worst time of the week to trade usually is after around 17:00 GMT on Friday. Traders are wrapping up for the weekend so the last hours of the day can be chaotic and harder to predict.
On Monday, traders and businessmen are coming back from the weekend so the week starts out in a slow pace with lower trading activity and liquidity. But is doesn’t mean you can’t trade on Mondays!
»Best time:
The middle of the week, especially Wednesday, tends to have the highest level of trading activity. Such increased activity means bigger opportunity in currency prices.
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