Lesson 6 of 786% Complete

Forex Market Sessions & Trading Hours 🕒

Beginner14 min2025

Trading 24/5 doesn't mean trading ALL hours. The market is open Sunday 5 PM to Friday 5 PM EST, but 70% of daily volume occurs in just 4 hours: the London/New York overlap (8 AM - 12 PM EST). Session timing isn't a detail—it's the difference between grinding and profiting.

Welcome to Lesson 5

You've mastered Market Structure and Liquidity Providers. But here's what separates amateurs from professionals:

WHEN you trade matters as much as WHAT you trade.

The Professional Difference: Retail traders see "24/5 trading" as freedom to trade anytime. Professionals see it as "4 hours of opportunity + 116 hours of noise." They know London/NY overlap (8 AM - 12 PM EST) = 70% of volume. They trade ONLY when major institutional participants are active. Session timing is the ultimate edge multiplier.


Lesson Chapters

1The 24/5 Trading Cycle

The Forex market's non-stop operation results from its Over-The-Counter (OTC) decentralized structure. As Earth rotates, major financial centers open and close, passing the "liquidity baton" globally.

The Weekly Trading Cycle

Market Opens:

  • Sunday 5:00 PM EST: Sydney/Wellington session begins
  • Week officially starts (Monday morning in Australia)

Market Closes:

  • Friday 5:00 PM EST: New York session ends
  • Weekend begins (48-hour market closure)

The 24-Hour Flow:

Sunday 5 PM EST: Sydney opens (week begins)
  ↓ 2 hours later
Sunday 7 PM EST: Tokyo opens (Asian session)
  ↓ 8 hours later
Monday 3 AM EST: London opens (European session)
  ↓ 5 hours later
Monday 8 AM EST: New York opens (overlap begins)
  ↓ 9 hours later
Monday 5 PM EST: Cycle repeats

The Concept of Liquidity Flow

Liquidity = Number of Active Participants × Trading Volume

High Liquidity (London/NY Overlap):

  • European banks: Active
  • US banks: Active
  • Hedge funds: Active (both regions)
  • Result: Massive volume, tight spreads, instant execution

Low Liquidity (Asian Session):

  • Only Asian banks active
  • European/US banks: Closed
  • Result: Lower volume, wide spreads, potential slippage

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2The Four Major Sessions

The global market divides into four main sessions, each with distinct characteristics.

Sydney (Pacific) Session 🌏

Active Hours: 5:00 PM - 2:00 AM EST

Characteristics:

  • Lowest volume (~5% of daily global volume)
  • Lowest volatility (20-30 pip range)
  • Consolidation period

Best Pairs: AUD/USD, NZD/USD

Strategy: Range trading


Tokyo (Asian) Session 🗾

Active Hours: 7:00 PM - 4:00 AM EST

Characteristics:

  • Moderate volume (~20% of daily volume)
  • Range-bound bias
  • Respects technical levels

Best Pairs: USD/JPY, EUR/JPY, GBP/JPY

Strategy: Range trading, mean reversion


London (European) Session 🇬🇧

Active Hours: 3:00 AM - 12:00 PM EST

Characteristics:

  • HIGHEST volume (~38% of daily volume)
  • Highest liquidity (London = Forex capital)
  • Trend establishment

Best Pairs: EUR/USD, GBP/USD, EUR/GBP

Key Events:

  • 3:00 AM: London open (volatility spike)
  • 4:00-5:00 AM: European data releases
  • 7:30 AM: ECB/BoE announcements

Strategy: Breakout trading, trend following


New York (North American) Session 🗽

Active Hours: 8:00 AM - 5:00 PM EST

Characteristics:

  • High volume (~22% of daily volume)
  • News-driven (US economic data)
  • Two phases: Morning (high), Afternoon (declining)

Best Pairs: All USD pairs, USD/CAD

Key Events:

  • 8:30 AM: US data (NFP, CPI, GDP)
  • 2:00 PM: Fed announcements

Strategy: News trading, trend continuation

Session Comparison Table

SessionVolume %VolatilitySpread (EUR/USD)Best For
Sydney5%Very Low3+ pipsAUD/NZD pairs
Tokyo20%Low-Moderate2-3 pipsRange trading
London38%High0.6-1.0 pipsBreakouts, trends
New York22%High (AM)0.8-1.5 pipsNews trading
Overlap70%Extreme0.5-0.8 pipsAll strategies

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3The Session Overlaps

The most profitable periods occur during session overlaps—when two major financial centers trade simultaneously.

A. London/New York Overlap (The Golden Window) 🥇

Time: 8:00 AM - 12:00 PM EST (4 hours)

Why It's THE Most Important:

1. Highest Combined Volume:

  • London: 38% of daily volume
  • New York: 22% of daily volume
  • Overlap captures: ~70% of total daily volume

2. Tightest Spreads:

  • EUR/USD: 0.5-0.6 pips (lowest of entire day)
  • GBP/USD: 0.8-1.0 pips
  • Cost savings: 50-70% vs. Asian session

3. Institutional Activity:

  • European banks executing orders
  • US banks opening positions
  • Hedge funds active (both continents)
  • Result: Real price discovery, tradable trends

4. Major News Releases:

  • 8:30 AM: US employment (NFP), inflation (CPI), GDP
  • 10:00 AM: Consumer confidence, housing
  • News impact: 100-300 pip moves possible

Best Pairs:

  • EUR/USD (most liquid, tightest spread)
  • GBP/USD (high volatility, clean moves)
  • USD/JPY (strong directional bias)

Strategy:

  • Scalping (tightest spreads enable 5-10 pip targets)
  • Day trading (ride 30-50 pip moves)
  • Breakout trading (London high/low breaks)
  • News trading (8:30 AM releases)

Professional Rule: If you can only trade 4 hours per day, make it THIS window.


B. Tokyo/London Overlap

Time: 3:00 AM - 4:00 AM EST (1 hour)

Characteristics:

  • European traders entering as Tokyo exits
  • Liquidity increase from Asian lows
  • Direction often shifts

Best Pairs: GBP/JPY, EUR/JPY, EUR/GBP

Strategy: Fade Asian range extremes, watch for breakout confirmation


Times to AVOID

1. Sunday Opening (5:00-7:00 PM EST):

  • Weekend gaps (price jumps from Friday close)
  • Extremely wide spreads (5-10 pips)
  • Rule: Never hold positions through weekend

2. Friday Late Afternoon (3:00-5:00 PM EST):

  • Liquidity drain (institutions closing)
  • Wider spreads (2-3x normal)
  • Rule: No new positions after 3 PM Friday

3. Major Holidays:

  • Banks closed (50-70% volume missing)
  • Spreads 3-5x normal
  • Rule: Check calendar, avoid trading

4. Asian Session (For Non-Asian Pairs):

  • Wide spreads (2-3 pips vs. 0.6 pips overlap)
  • Choppy price action
  • Exception: If trading USD/JPY, AUD/USD
Pro Tip

Professional Time Management: Trade 4-6 hours daily MAX, focused on London/NY overlap. This isn't part-time trading—it's PROFESSIONAL trading. Better win rate (optimal conditions), lower costs (tight spreads), higher profitability (quality over quantity). If you can't trade during overlap (work schedule), swing trade instead (session timing less critical for multi-day holds).

Master the Golden Window

Practice trading during the London/NY overlap to experience the tightest spreads and highest volatility

4Summary, FAQs & Quiz

Summary

Key Principles (0/5)

24/5 Trading Cycle
Opens Sunday 5 PM EST (Sydney), Closes Friday 5 PM EST (New York), Liquidity flows through four major hubs
Four Major Sessions
Sydney: 5 PM - 2 AM EST (lowest volume, 5%), Tokyo: 7 PM - 4 AM EST (moderate volume, 20%), London: 3 AM - 12 PM EST (highest volume, 38%), New York: 8 AM - 5 PM EST (high volume, 22%)
Critical Overlaps
London/NY: 8 AM - 12 PM EST (70% of daily volume), Tokyo/London: 3 AM - 4 AM EST (15% of volume)
Best Trading Times
#1 Priority: London/NY overlap (8 AM - 12 PM EST), Scalping: Requires this window (tightest spreads), Day Trading: Optimal during overlap
Times to Avoid
Sunday opening (wide spreads, gaps), Friday 3-5 PM (liquidity drain), Major holidays, Asian session (for EUR/USD, GBP/USD)

Frequently Asked Questions

Q1: What is a "weekend gap" and how do I manage it?

Weekend Gap = Price jumps between Friday close and Sunday open (48-hour market closure allows news to move price)

How to Manage:

Option 1: Close All Positions (Safest)

  • Close by Friday 3 PM EST
  • Zero weekend exposure
  • Professional standard

Option 2: Use Guaranteed Stop Loss (GSL)

  • Some brokers offer GSL (fills at exact stop, even if gapped)
  • Cost: Wider stop distance required

Professional Rule: Never risk more than 1-2% on weekend holds. Most pros close everything Friday.

Q2: Why are spreads usually wider during the Asian session?

Spreads widen during Asian session due to LOW LIQUIDITY.

Asian Session Reality:

Liquidity Providers Active:

  • Asian banks: 5-10 (vs. 20-30 during London)
  • European banks: 0 (closed)
  • US banks: 0 (closed)

Result:

  • Less competition = wider spreads
  • EUR/USD: 2.5 pips vs. 0.6 pips during overlap

Quiz

The 'Golden Window' of peak liquidity and volatility occurs during which session overlap?

Answer:

Correct Answer: London and New York - The London and New York overlap (8 AM - 12 PM EST) is the 'Golden Window.' This 4-hour period captures ~70% of total daily volume as both major financial hubs are active.

Which characteristic is MOST associated with the Asian trading session?

Answer:

Correct Answer: Low volatility and range-bound price action - The Asian session is characterized by low volatility and range-bound price action. With only ~20% of daily volume, price tends to consolidate within clear support/resistance ranges.

If you are a scalper seeking the tightest possible spread, which session should you prioritize?

Answer:

Correct Answer: London Session - London Session (especially London/NY overlap) offers tightest spreads. EUR/USD spread during London: 0.5-0.8 pips (vs. 2.5 pips Asian). For scalping 5-15 pip targets, spread cost is critical.

Why is trading often ill-advised during the final hour before the market closes on Friday?

Answer:

Correct Answer: Liquidity drops sharply, leading to erratic price action and wide spreads - Institutions close positions for the weekend, volume plummets, spreads widen 2-3x. Professional rule: Close by 3 PM Friday, no new trades after 4 PM.

What percentage of total daily Forex volume occurs during the London/New York overlap?

Answer:

Correct Answer: 70-80% - 70-80% of total daily Forex volume occurs during the London/New York overlap (8 AM - 12 PM EST). This extreme volume concentration creates tightest spreads, best execution, clearest trends, and major news catalysts.


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Proceed to Lesson 6: Why People Trade Forex (Hedging, Speculation, Arbitrage)

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Call to Action

You now possess strategic knowledge of market timing—the difference between grinding and profiting.

Experience Session Timing in Real-Time

Open a free demo account and trade during different sessions. Compare Asian session (wide spreads, choppy) vs. London/NY overlap (tight spreads, clean trends). Witness institutional flow during the golden window.

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Prerequisites

Before studying this lesson, ensure you've completed:

Ready to master session timing? Understanding when to trade is just as important as knowing what to trade.

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