Choosing a Session to Trade

The markets never sleep. Somewhere, someone is trading something. But there are times of higher volume, and those are usually the most important times of the day that traders keep a keen eye on.

The four most important sessions each day are the London, New York, Tokyo, and Sydney sessions. They can also be split into 3 main continents; known as the Asian, European, and US sessions.

Some markets, such as the Forex and crypto markets never close, trading 24/7. Others, such as the NYSE, have precise opening and closing hours around which there is a lot of attention from traders.

The exact hours will vary according to the specific region and timezone. But traders tend to refer to a trading session as the period between the opening bell and closing bell of a particular day, or the time in which a certain continent tends to dominate volume as other parts of the world sleep.

London, New York, and Tokyo are the most important financial centers in the world and tend to dominate most trading sessions, taking turns as the earth spins. 

The markets are typically most active when large banks and corporations conduct business in these cities. These sessions are:

• Asian Session

The first market to open on a new day is known as the Asian Session or the Tokyo Session. Depending on geographical location, some participants may use the data and market close from the Asian session for planning how the day might pan out in Europe and the US.

There are scheduled activities during the Asian session from 11:00 p.m. until 8:00 a.m. Greenwich Mean Time. In the forex market, around 6% of all transactions are conducted on the Asian market.

• European Session

Despite the UK no longer being a part of the common market, the London opening is still regarded as the start of the European session. Some of the world’s largest banks are in London and approximately 34% of the daily forex volume is traded in the London session.

Frankfurt is also considered an important part of the European market, opening 1 hour after London and significantly increasing volume.

• US Session

Even though Canada and Mexico contribute to the market activities in the North American Session, the activity is dominated by American activity, specifically in New York City. 

The US session starts in the middle of the European session, the overlap often being the busiest time of the 24 hour cycle with the most volume traded.

• Into The Close

Knowing when markets open and close is essential no matter what exchange or security you are trading. For day traders it can be especially important, since any position left open will be affected by changes in margin requirements. It is even important for swing traders, since they often look at the closing price for confirmation within the framework of their signals.

• Cash Open

When the underlying cash market for the related futures instrument opens, it is referred to as the cash open.

Trading events are usually pre-scheduled events such as earnings reports or central bank statements, but they can also be breaking news.

Let’s look at a few events and how to trade them within the context of trading sessions.

• Economic Calendar

An economic calendar keeps track of significant market events, such as economic data and monetary policy announcements. 

Some economic calendars color-code the events based on potential impact. Some events are more likely than other to have a large impact on price, especially if the release comes out with unexpected data or news.

• Breaking News

Breaking news is by definition unexpected, therefore can have a large impact on price action.

When news breaks, it is often covered as the more important piece of news. An exciting narrative may pique the curiosity and sway traders, pushing price further away from recent equilibrium before the dust settles and more participants can better decipher the impact of the news.

• Trading Multiple Timeframes

If a trader doesn’t have any specific time constraints and can choose to trade any session they wish, it often makes sense to trade multiple sessions as well as multiple time frames.

Trading multiple timeframes and their overlapping sessions can be a great way to catch trends and even reduce risk, if done correctly. This can be further fine-tuned with the concept of fractals.

• Fractals

These are mathematical patterns that repeat at different scales. They are interconnected, just like timeframes, and trading patterns often have a fractal element to them.

We have written about fractals before, so please have a look at our article Trading Fractals.

Choosing a session to trade (or trading overlapping sessions) is vital for day traders and swing traders alike. Bookmap comes with various looks and indicators that can be modified to update for specific opening and closing hours.

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