Even though the forex market is open 24 hours a day, the market experience very different levels of volatility. Also the liquidity or volatility of different currency pairs differs considerably in different hours of a day. This is because the difference in market participants at different time periods. The world FX market can be categorized to three different trading sessions and currencies related to each session are most liquid in that session.
- Asian Forex Trading Session: Usually the trading hours from 11 p.m. to 8 a.m. GMT is regarded as the Asian trading session. It is also known as Tokyo session. The session is mainly represented by Tokyo capital market participants but also include participants from countries like China, Australia and New Zealand. When opened after the week holidays, this Asian session can have high volatility and can be used as an indicator of future changes.
- European Forex Trading Session: Usually the trading hours from 7 a.m. to 4 p.m. GMT is regarded as the European session. It is also known as London session. The session is mainly represented by participants from UK, France, Germany and Switzerland.
- North American Forex Trading Session: Usually the trading hours from noon to 8 p.m. GMT is regarded as the North American session. It is also known as New York session. The session is dominated by participants from USA but also include a few from Canada, Mexico and Latin American countries. The market is usually high in participation and volatility.