The system of three sessions of the Forex market.
February 21st, 2010
One of the best features of the international currency market (Foreign Exchange Market) is that it's open 24 hours a day. This allows investors to trade the world over the course of the business day after work or even in the middle of the night. However, times were not all created equal. Although there is always a market for this asset class which is the most liquid, there are times when price changes (Price Action) is consistently volatile and periods where it is zero.
In addition, different currency pairs (Currency Pairs) show a variant activity at different times of day due to operational general demographics of the market participants who are online at that time. In this article, we shall cover the major currency trading
sessions, we will explore what kind of market activity can be expected in different periods and show how this knowledge can be adapted within a forex investment plan.
Dividing a market in 24 hours trading sessions manageable.
Although a 24 hours market offers a considerable advantage for many operators (Trader), institutional and individual, as it ensures liquidity and the opportunity to operate at any time imaginable, it also has disadvantages. Although currencies can be operated at any time, an operator can monitor only one position for some time. This means that there will be times when you miss opportunities, or worse, in which an increase in volatility will lead to the current exchange rate (spot) to move against an established position when the operator is not present. To minimize this risk, an operator needs to be aware of where the market is volatile regularly and decide what times are best for your investing strategy and style.
Traditionally, the market is split into three sessions during the corresponding activity peaks: the Asian session, European and American. Informally, these three periods are known as the meetings in Tokyo, London and New York. These names are used interchangeably, as these three cities represent the largest financial centers for each of the regions. Markets are more active when these three stations are doing business, since most of the banks and corporations do their daily transactions and there are more speculators online. Now aproximémonos a little more to each of these sessions ...
Tags: foreign exchange market, London, New York, Tokyo