Secret Rhythms of Forex Time Zones

I’ve mentioned in the past that I don’t trade the Asian session.  This year though, I have opened GBP/JPY positions.  No other pair I’ve observed has as much volume as the GBP/JPY during this session so if I like what I see, I won’t hesitate to pull the trigger.  But other than the GBP/JPY, most other pairs don’t exhibit the volatility that a shorter term trader would prefer.  

Asian session characteristics:

1. quietest, least volatile of the three Forex trading sessions
2. account for 15% of daily turnover
3. typical 20-30 pip ranges for the EUR/USD
4. spreads increase
5. price action more due to Australian and New Zealand economic announcements than Japanese

The European trading session is a better time than ever to trade the volatility of the Forex market.  I trade this session more than any other and find it suits me.  I know most times at what price I’ll enter a trade so a lot of my positions trigger automatically sometime between 2 am and 5 am EST.  Many times, they’ll also close automatically during this time range without me ever knowing because I’m asleep.  This suits me because it prevents me from micromanaging positions which I sometimes have a habit of doing.   

European session characteristics:

1. London is the heart and soul of FX and has over 200 market maker dealers
2. 35% of daily trading volume
3. whipsaw moves
4. spreads decrease
5. some observe the first price move during this session to be false as dealers run stops and explore support and resistance levels

I trade the US trading session but not as much as the European.  I’m strictly a technical trader and since the US economic announcements move the Forex market like no other, I don’t feel that comfortable.  I used to trade more during this time but found that Forex brokers made it more difficult to properly manage a position (platform slowdown, increased spreads, wild swings.)

US session characteristics:

1. account for 25% of daily turnover
2. 10% of turnover from Greenwich, CT, the hedge fund capital of the world
3. some observe that all price action that occurred during the Euro session is reversed
4. the focus turns from European economic news to US economic news

Source for some of the information came from the article titled, "Secret Rhythms of FX Time Zones" at http://www.sfomag.com.

Explore these additional posts at Forex Project relating to Forex Time Zones:

1. Is Trading The Asian Session a Waste Of Time?
2. Most Volatile Pairs during Asian Session

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