This section will tell you the major cities where foreign currencies are traded and the characteristics of the Forex trading day.
Unlike the futures and equity markets, the Forex market trades actively 24 hours a day.
Asian Trading Session
The first major money center to open and therefore the start of the first major session in the Forex market is the Asian Trading session which corresponds with the start of business hours in Tokyo at 22:00 GMT on Sunday.
While still considered one of the three major money centers, only 7.6% of Forex transactions flow through Tokyo trading desks, so the Asian trading session is the least active of the three. While there is active trading in Yen based currency pairs during Asian hours the market for currencies outside of Yen based pairs is relatively thin, making Asian trading hours a time when the larger banks and hedge funds in the market will sometimes try and push the market in their favor.
European Trading Session
Begins with the start of London business hours at 08:00 GMT. While New York is considered by most to be the largest financial center in the world, London is still king of the Forex market with over 32% of all Forex transactions taking place in the city. Before the Euro there were more than a dozen additional currencies in Europe making foreign exchange part of every day life for both individuals and businesses operating in the region. In addition to this, London is situated perfectly from a time zone standpoint with business hours for both the large eastern and western economies taking place during London Forex trading hours.
US Trading Session
Begins with the start of New York business hours at 13:00 GMT. New York is a distant second to London in terms of Forex trading volumes with approximately 19% of all Forex transactions flowing through New York Dealing Rooms.
The most active part of the US Trading session, and the most active time for the Forex market in general, is from about 13:00 GMT-17:00 GMT when both London and New York trading desks are open for business. You can see very large volatility in the Forex market during this time as in addition to both New York and London trading desks being open, most of the major US economic announcements are released during these hours as well.
The trading day winds down after 21:00 GMT with most electronic platforms closing for business at around 23:00 GMT on Friday.
