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Your Essential Guide To The 3 Forex Market Sessions!

It’s always been a weird thought for me, knowing that when I'm waking up at 8 or 9 a.m. people are just going to bed on the other side of the world. When we're asleep we normally forget the fact that the world goes on turning.

In this article I will be discussing:

  • What The Trading sessions are?

  • Why the Trading sessions are important?

  • What are Volatility and Liquidity?

  • How knowing the will sessions SAVE YOU MONEY!

  • KEY FACTS about the different trading sessions!

  • Why Retail Traders LOSE!

  • The Best Pairs To Trade And when to trade them!

The forex market is probably one of the few things in the world that never stops, like New York, it truly is the industry that never sleeps.

By the end of this article you will have one up on retail traders, you will be able to look at the bigger picture of the forex market determining when the best times to trade are whilst being able to ignore the clickbait from news sites desperate for views and focus on the information professionals use!

What Are The Trading Sessions?

Stretching across all the continents of the world the forex market is broken up into 3 sessions: the Asian session, the London session and the New York session. As one set of Traders finish for the day another set is always starting up.

Why are Trading sessions important?

Wherever you are in the world there is always a forex trading session open whether it's in Asia, Europe, or North America.

The peak of activity is seen in the London and New York sessions, lots of sessions overlap to form time periods of drastic price movement (volatility) and large numbers of traders active in the markets (liquidity).

These sessions are also important as news is released at the start of each session that relates to that specific time zone, this is why we normally see the high amounts of active traders and big price movement in these early hours of trading.

Traders normally call this a "period of high volatility and liquidity in the market"

Hang on! what is volatility and liquidity? and why is it important?

Don't worry, I'm going to get into that right now....

As LITA Traders we love volatility, as it means there is a lot of opportunity in the market for us to make money, while our other blogs will teach you everything you need to know about how to make money in the forex market, today I'm going to focus on defining and explaining to you what volatility and liquidity are and how their impact is felt during the different trading sessions.

What is liquidity?

One reason the forex market is so liquid is because it's tradeable 24 hours a day 5 days a week, with nearly $6 trillion worth of movement each day!

There is normally a high level of liquidity in the market at any given time. However, as we now know in certain times during the day there is more liquidity than others; mainly in the London and New York sessions as this is where the highest volume of Asset Managers, professional traders or retail traders are awake and active in the markets.

Here is an example of a GBP/USD price chart showing the relationship between Liquidity and price.

As you can see from above the high levels of liquidity are seen in the London and New York sessions. you can also see the relationship between the different sessions and volatility...but wait, what's Volatility?

What is volatility?

Volatility is our friend at logikfx!

Highly volatile markets have lower liquidity, meaning that less traders either professional or retail are trading that currency asset, this means more opportunity to make money in these markets as there are less people involved with them.

Assets with high levels of liquidity tend to be less volatile due to the fact that large amounts of people are buying and selling the asset simultaneously cancelling the other out - the high liquidity markets normally move in what's called a range.

Here is an example of a ranging market: