Global Trading Sessions

Global Trading Sessions
TradeGM Analysis date_range June 8th, 2021

One of the biggest perks of being a trader is that the financial markets are divided into global trading sessions. This means that traders across the globe can access the markets and open positions 24 hours a day – regardless of time zone. In other words, they are not bound by the clock; they can trade in the morning, during lunch, after work, or even in the middle of the night.  

Financial markets are open five days a week. During those days, professional and retail traders, central banks, hedge funds, investment management firms, and others participate in the movement of the market. However, the markets are not dominated by one exchange; instead, a global network of brokers and exchanges dictates the trading sessions. Typically, the trading sessions are named after the city that is considered the financial hub of the area. 

What are trading sessions? 

The 24-hour financial markets are made up of three major trading sessions: the London session, the New York session, and the Tokyo session.  These represent manageable trading periods because traders can’t open and close positions for 24 hours every day. Traders need to sleep, eat, rest, and strategize, so they typically pick one or two trading sessions to participate in. 

The three global trading sessions borrow their names by the geographic, financial hubs of the areas they represent.  

The Tokyo session (23:00 – 08:00 GMT) is the first one to open, and it tends to set the trend for the rest of the trading day. Many participants use this time to gauge future market dynamics. Additionally, the trade momentum during this session can help them develop strategies. Besides Tokyo, many other exchanges and brokers are operating during this time, including those in Hong Kong, Singapore, Russia, Australia, and New Zealand. 

The London session (07:00 – 16:00 GMT) is the largest and probably most important session in the world, accounting for as much as 34% of daily forex trading volume. The London session opens just as the Asian one begins to wind up. It is the benchmark for high market volatility because it is the key financial centre in Europe. 

The New York session (12:00 – 20:00 GMT) overlaps with the London session for a few hours, with transactions slowing as liquidity dries up and European traders exit the market. Nonetheless, this session represents roughly 19% of all forex transactions. Its participants include the US and Canada primarily, but all also extend to some South American countries like Mexico. 

Different financial instruments move differently depending on the session. For example, the euro (€) is most likely to make serious moves during the London session, while the dollar ($) will most likely move drastically during the New York session.  

Final Thoughts 

Although the global financial markets are open 24/5, not all times of the day are equal when it comes to trading. Certain sessions are more volatile than others, and it is possible to trade both low and high volatility, depending on the trader’s strategy. However, due to the high volatility, traders need to observe and take measures to hedge their positions against movements that counter their open positions.  

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. X