Forex Trading And Tax Planning Strategies: Toronto Attorney Guidance – Unlike many other financial markets, the forex market stays open 24 hours a day throughout the trading week. Different world currency markets overlap when they open at different times, allowing forex trading to continue uninterrupted from the weekly market opening until the following weekend arrives.

Because of different forex session times, some currencies tend to have more liquidity than others during 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 Tax Planning Strategies: Toronto Attorney Guidance

Forex Trading And Tax Planning Strategies: Toronto Attorney Guidance

In this article, the importance of time differences between the main forex trading sessions is explained. The forex 3-session market system is also discussed along with how savvy forex traders can benefit from this knowledge.

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The Forex 3-session market system consists of the Asian-Pacific, European and North American trading sessions. These sessions generally correspond to the hours that the main financial centers operating in the regions remain open for business. The image below shows the trading hours of the three forex trading sessions, when they overlap and the approximate operating hours of the local markets in their component money center cities.

The image shows a rough guide to the usual forex trading hours for the 3 major trading sessions and the various major and minor money centers. Times are shown in GMT, ET and JT. Black rectangles indicate the “witching hour” between New York’s close and Tokyo’s open. Source: “

Trading for the Asia-Pacific Forex trading sessions begins each night at approximately 4:00 p.m. Eastern Time (ET) in Wellington and Auckland then Sydney. The session begins in earnest when Tokyo opens around 7:00 p.m. ET, followed by Hong Kong and Singapore an hour later at 8 p.m. ET.

The European session then opens on the following day in Frankfurt and Paris at 3:00 ET, increasing in activity and volatility on the opening of London around 4:00 ET.

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The Asian-Pacific session continues to operate until around 5:00 p.m. ET, while the European session remains open until the London close between noon and 1:00 p.m. et. Trading in Tokyo overlaps with the London session from 4:00 to 5:00 ET.

The North American session then opens when the New York market begins trading at 9:00 a.m. ET. It overlaps with the European session for around 4 hours while the banks of London continue to trade.

Trading in New York and Toronto continues until 5 p.m. ET when rollovers occur and Sydney reopens. North American banks in Chicago remain open for another hour, while those in the West Coast cities of Los Angeles and San Francisco continue to make markets for another 3 hours.

Forex Trading And Tax Planning Strategies: Toronto Attorney Guidance

The local forex markets operating in major money 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 major financial market open somewhere during its typical market hours that stretch from Sunday evening to Friday evening New York time.

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The 3-session market system refers to the three forex trading sessions that largely operate in the major financial centers of Tokyo, London and New York. The money center cities serve as the main hubs where currencies trade during the three forex market trading sessions.

The foreign exchange market also operates to a lesser extent in smaller financial centers. In the Asia-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 4pm. ET on Sunday. Market liquidity increases significantly when Sydney’s banks open approximately two hours later at around 6pm. et.

After operating around the clock as the three trading sessions cycle each weekday, the forex market mainly closes at 5pm. New York time (ET) on Friday, although some minor forex trading activity may continue until market-making banks based in San Francisco and Los Angeles 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 close also marks the point at which daily rollovers occur. A trading position held beyond 5:00. New York time will either 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.

Because of the existence of the three trading sessions, you can usually trade the forex market continuously in liquid trading conditions from around 5 pm. Sunday through Friday at 5 p.m. New York Times (ET). Although no sane trader would attempt to trade without a break during the forex trading week, you could code and operate a forex trading robot to take advantage of trading opportunities that may arise during the time you are away from the market.

Since some regions favor trading in certain currency pairs over others because of the existence of local transaction interest in those pairs, the corresponding forex trading sessions typically provide better pricing and see 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.

Forex Trading And Tax Planning Strategies: Toronto Attorney Guidance

Below you can find descriptions of the three main forex trading sessions along with information on what might make the best choice for profitable forex trades.

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The Asian-Pacific session of the forex market opens somewhat tentatively in the South Pacific around 4:00. ET in Auckland and Wellington but it builds liquidity significantly once the Sydney market opens at 6 p.m. et.

The Asia-Pacific session then sees Hong Kong and Singapore open around 8pm. ET, followed by Tokyo, which dominates the session until it ends at the Tokyo close around 5:00 p.m. ET.

The Asian-Pacific forex session often displays the thinnest transaction volumes and the widest trading spreads on otherwise liquid currency pairs that can react violently to unexpected news and macroeconomic data that deviates significantly from the market consensus.

Although these challenging trading conditions may not be optimal 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 starts when banks based in Frankfurt and Paris open on the continent at approximately 2:00 p.m. ET. The Forex London session time frame starts an hour later around 3:00 ET.

The European session closes between noon and 1 p.m. ET when the London banks close for the day. The main trading session has special importance because it overlaps with the Tokyo session which closes around 5:00 ET and with the New York session which opens around 9:00 ET.

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 like EUR/USD, GBP/USD and CHF/USD and major crosses like EUR/GBP and EUR/CHF tend to trade most actively during this session, especially since key economic data for the UK and the Eurozone is usually . Released early in the European session.

Forex Trading And Tax Planning Strategies: Toronto Attorney Guidance

The North American session starts to work fully at 9:00 ET as banks open in New York and Toronto and while the high-volume London session is in full swing. Having market-making banks located in the two largest financial money centers in the world open for business at the same time results in excellent forex market liquidity and generally very tight trading spreads.

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Also, in this session the release of almost all US it. Macroeconomic news that can significantly affect most exchange rates since the US it. Dollar dominates the forex market. Currency pairs that include the US it. Dollar, including all the major currency pairs, tend to see considerable volatility after the release of US. it. Economic data.

This data typically comes out at the beginning of the New York trading session, so this can be a great time to use a news trading strategy or other short-term strategies that take advantage of considerable market volatility.

After the London market closes between noon and 1:00. ET, market liquidity typically contracts in the New York close at 5:00. et. Also, trading spreads in the late North American session can increase at US.

The effects are usually magnified on Friday afternoon as traders in Europe exit the market while Asia is already closed for the weekend. For this reason, trading Forex on Friday afternoon during the New York session may not be optimal for profits as a short-term trader, although those who use a long-term trading strategy may see the level they are looking to trade during this time.

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A notable time frame to avoid operating in occurs

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