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Forex Trading And News Trading: How Toronto Attorneys Can Advise Traders – Unlike many other financial marketplaces, the forex market remains open 24 hours a day throughout the trading week. Different currency markets in the world overlap as they open at different times, allowing forex trading to continue uninterrupted from the weekly market opening until the next one arrives. end of the week.
Due to different forex session times, some currencies tend to have more liquidity than others in certain time frames. This factor can often affect the success of a forex trading strategy, and smart currency traders can use this phenomenon to increase their profit opportunities.
Forex Trading And News Trading: How Toronto Attorneys Can Advise Traders
In this article, the importance of time differences between major forex trading sessions is explained. The forex 3-session market system is also discussed along with how smart forex traders can benefit from this knowledge.
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The forex 3-session market system consists of Asian-Pacific, European and North American trading sessions. These sessions usually correspond to times when the major financial centers operating in those regions remain open for business. The image below shows the trading hours of the three forex trading sessions, when they overlap and the approximate hours of operation of the local markets in their currency center cities.
The image shows a rough guide to typical forex trading hours for the 3 main trading sessions and the various major and minor money centers. Times are displayed in GMT, ET and JT. The black rectangles indicate the “witching hour” between New York’s close and Tokyo’s open. Source: “
Trading for the Asian-Pacific forex trading session begins each evening at approximately 4 p.m. Eastern Time (ET) in Wellington and Auckland then Sydney. That session will begin in earnest once Tokyo opens around 7 p.m. ET, followed by Hong Kong and Singapore an hour later at 8 p.m ET.
The European session opens the next day in Frankfurt and Paris at 3:00 a.m. ET, activity and volatility picks up as London opens around 4 a.m. E.T.
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The Asian-Pacific session continues to work until around 5 a.m. ET., while the European session remains open until the London close between noon and 1 p.m. E.T. Trading in Tokyo overlaps with the London session from 4 a.m. to 5 a.m. E.T.
The North American session then opens when the New York market begins trading at 9 a.m. E.T. It overlaps with the European session for about 4 hours as London banks continue to trade.
Trading continues in New York and Toronto until 5:00 p.m. ET when the rollovers take place and Sydney reopens. North American banks in Chicago will remain open for another hour, while those in the West Coast cities of Los Angeles and San Francisco will continue to make markets for another 3 hours.
Local forex markets operating in major financial centers around the world open and close at different times in different time zones as the trading day progresses. This means that the 24-hour forex trading day always has a large financial market open somewhere during its typical market hours which run from Sunday evening to Friday evening New York time.
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The 3-session market system refers to three forex trading sessions that mainly operate in the major financial centers of Tokyo, London and New York. These currency center cities serve as the main hubs where currencies are traded during the three forex market trading sessions.
The foreign exchange market also operates to a lesser extent in smaller financial centers. Within the Asian-Pacific region, these include Auckland and Wellington in New Zealand, Sydney in Australia, and Hong Kong and Singapore. Smaller European forex trading centers include Frankfurt and Paris, while smaller North American trading centers include Toronto, Chicago, San Francisco and Los Angeles.
The forex trading week begins in New Zealand’s major cities of Auckland and Wellington when banks there open around 4 p.m. ET on Sunday. Market liquidity then increased significantly when Sydney banks opened about two hours later at around 6 p.m. E.T.
After operating around the clock as three trading sessions rotate each weekday, the forex market then primarily closes at 5 p.m. New York time (ET) on Friday, although some minor forex trading activity may continue until San Francisco and Los Angeles-based market-making banks close for the weekend.
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New Zealand and Sydney also start each daily trading cycle, while the New York session ends the daily cycle. The New York shutdown also marks the point where daily rollovers occur. A trading position held after 5 p.m. New York time can cost you interest if you are short the higher interest rate currency in a currency pair or you will be credited with interest if you are long the higher interest rate currency. money
Due to having three trading sessions, you can usually trade the forex market continuously in liquid trading conditions from around 5 p.m. on Sunday through Friday at 5 p.m. New York Time (ET). While no sane trader would attempt to trade without a break during the forex trading week, you can code and run a forex trading robot to profit from trading opportunities that may arise while you are away. in the market.
Since some regions favor trading certain currency pairs over others due to local interest in trading those pairs, corresponding forex trading sessions usually provide better pricing and visibility more volatility in those pairs. For example, the AUD/USD and USD/JPY pairs tend to be more active during the Asian-Pacific forex session than during the European and North American sessions.
Below you will find descriptions of the three main forex trading sessions along with information about which one can make the best choice for profitable forex trades.
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The Asian-Pacific session of the forex market will partially open in the South Pacific at around 4 p.m. ET in Auckland and Wellington but then it builds significantly once the Sydney market opens at 6 p.m. E.T.
The Asian-Pacific session will see Hong Kong and Singapore open around 8 p.m. ET, followed by Tokyo, which then dominated the session until ending with the Tokyo close around 5 a.m. E.T.
The Asian-Pacific forex session often shows the thinnest transaction volume and the widest dealing spreads among liquid currency pairs that can react violently to unexpected news and macroeconomic data that deviate significantly from market consensus.
While these challenging trading conditions may not be ideal for inexperienced and novice traders, some seasoned forex traders have learned to take advantage of them.
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For those interested in trading forex during European hours, the European forex session begins when banks based in Frankfurt and Paris open on the Continent at approximately 2 a.m. E.T. The time frame of the forex London session starts an hour later at around 3 a.m. E.T.
The European session closes between noon and 1 p.m. ET when London’s banks closed for the day. This main trading session is of special importance as it overlaps with the Tokyo session which closes around 5 a.m. ET and the New York session opens at around 9 a.m. E.T.
Once London opens, the European session tends to have the most liquidity and favorable trading conditions for most short-term forex traders. Also, major currency pairs such as EUR/USD, GBP/USD and CHF/USD and major crosses such as EUR/GBP and EUR/CHF are often traded during this session, especially since the main data of the economy for the U.K. and the Eurozone is usually released early in the European session.
The North American session will start working in full at 9 a.m. ET as banks opened in New York and Toronto and as the high-volume session in London was in full swing. Having market-making banks located in the world’s two largest financial money centers open for business at the same time results in excellent forex market liquidity and generally very tight dealing spreads.
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Also, this session sees the release of almost all U.S. macroeconomic news. which can significantly affect most exchange rates since the U.S. dollar dominates. in the forex market. Currency pairs that include the U.S. dollar, including all major currency pairs, tends to see significant volatility after the release of U.S. economic data.
This data usually comes out at the beginning of the New York trading session making it a good time to use a news trading strategy or other short-term strategies that take advantage of large market volatility.
After the London market closes between noon and 1 p.m. ET, market liquidity typically picks up at the New York close at 5 p.m. E.T. Also, dealing spreads in the late North American session may widen among U.S. banks. based in Chicago, Los Angeles and San Francisco because fewer participants are active in the market because banks in New York have stopped quoting and Tokyo has not yet opened.
These effects are usually magnified on Friday afternoon as European traders exit the market while Asia is closed for the weekend. For this reason, trading forex on Friday afternoon in the New York session may not be optimal for profit as a short-term trader, although those using a long-term trading strategy will find the level they are looking for to trade on this time.
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